This paper reports on the cost efficiency of Australian airports using a Bayesian panel stochastic frontier
model. With data from 2002 to 2007, the paper focuses mainly on the post privatisation period of
Australian airports. The results show that the cost efficiency of Australian airports has increased over
time to reach a high value of 90.08% in 2007. The paper discusses the potential impact of factors such as
privatisation, price cap regulations and capital investments on the current efficiency level of Australian
airports.