Airports are key enhancers of commerce and trade; they generate massive transportation and key economic benefits (Vasigh, 2007). Privatization of airports relates to transfer of ownership of airport from public ownership sector to private ownership (Jobs Consultancy, 2007). Privatization process aims at increasing of efficiency, competitiveness and viable financing of airports. Considerations on whether to privatize an airport are made by governments and the decision has a long-term impact that follows (Jobs Consultancy, 2007). A complete and thorough review of the decision is made for a government to come up with a decision whether to privatize an airport or not. The complete review is necessary to ensure the decision is viable financially speaking and to avoid making a mistake that may be chaotic in the long run.
Privatization could be full privatization or just partial privatization. Financial implications of the idea of privatization must be thoroughly revised so that a clarified and transparent decision would be made. Ownership of airports takes place in many different forms. It could be through management articulating new investment programs such as selling of assets; management contracts; and private and public partnership agreements. Objectives of airport privatization includes modernization of both land and air-side facilities of the airline, minimize public or rather government interruption in airport management and operations, facilitate utilization of private capital and funding, building and financing airports, and or finally improving of service quality and efficiency (Vasigh, 2007).
Traditionally, airports have been managed, operated and owned by the government entities. United Kingdom started privatizing its ai...
... middle of paper ...
...n there long enough in the United Kingdom and hence most airports in UK are privately owned such that they generate a lot of profits due to passenger traffic despite the high government charges in airline fees.
In Conclusion privatizing of airports is generally meant to facilitate private financing for airport development, increase efficiency and upgrade its facilities. This has largely contributed, to fully or partial privatization of airports. Airports sought to expand and diversify their financial sources of funding for development purposes.
List of References
Adam Smith Institute, (2002). Plane Commonsense.
Retrieved from: http://adamsmith.org/80ideas/idea/70.htm
Job Consultancy, (2007). New Interest in US airport Privatization.
Retrieved from: http://www.leighfisher.com
Vasigh, (2007). Airport Privatization. Retrieved from: http://www.airports.org
In the Travel Pulse article "Airlines Leaving Us Little Choice – Like A Monopoly," posted by Rich Thomaselli, the practice of monopolization is observed in the airline industry. The author criticizes large airlines on their growth that has led to at “93 of the top 100 [airports], one or two airlines controlling a majority of the seats” (Thomaselli). The scornful article was written after recent events that have caused the Department of Justice and five States to sue two of the biggest U.S.
The first one includes the political and legal factors. These include the intervention of the government in the economic operations of the industry. The government intervention is necessary since it protects the interests of the passengers as well as the safety measures of the airline operations, (Inkpen & Degroot, 12). Economic factors are
Government-operated system of administering airport security, versus privately owned and operated, contracted airport security organizations have proved to be less efficient and effective for airports, passengers, and airline companies in the aviation industry. Factors such as the September 11th terrorist attacks have resulted in the creation of the Transportation Security Administration as it is been established by the government to control all airport security. A look into how San Francisco International Airport’s ability to remain secure while utilizing a private security company under contract with the federal government has shown to be efficient, cost-worthy, and effective for many airports. Returning to privately operated airport security throughout the country while regulated by the Transportation Security Administration shows great possibilities for all airports that want to follow suit.
The state of commercial aviation before and after the passage of the Airline Deregulation Act received much controversy from many different sides in the aviation industry. The Airline Deregulation Act caused many problems before and after it was enacted by the United States government. There were several possible courses of action. Two of these are included here as well as the problems and advantages of each. In conclusion, the rationale for the new law enacted by the government is presented.
Airborne should strengthen and continually improve its services domestically, since it gives larger revenues, then strengthen its alliances internationally, so as to serve the demands of the international market. To add on its profitability, Airborne should lease out a portion of the airport facilities to other airlines, so that it could have other source of income to compensate the maintenance costs of the airport.
Airports are extremely expensive in every respect imaginable. From the multi-million dollar runways to the multibillion dollar terminals, airports cost significantly more than most people might think; not to mention the hundreds of employees that demand wages. The aviation industry is notorious for being unstable and completely unpredictable. It is common for airlines to fold under extensive economic pressure, but it is essentially unheard of for airports to go bankrupt. A report by Airports Council International says that airports are making more money than ever before. It is known that airlines make money through airfare tickets, but how do airports make money?
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
British Airways commenced business in 1935 as a small airline that was privately owned, offering services restricted to the United Kingdom. Due to poor performance, the company was nationalised in 1939 with the state providing the required investment and resources necessary for growth (Brooks & Cullinane, 2007). The emergence of neo-classical economists claiming government ownership to be unproductive and inefficient, paved the way for privatisa...
Before we discuss government intervention and its affect on an industry’s competition we must first seek to understand the five forces framework. The theory, discussed in 1979 by Micheal Porter seeks to evaluate the attractiveness of an industry. Throughout this essay I will explore the theory and then relate government action and its well-documented affects on the airline industry.
In 1978, deregulation removed government control over fares and domestic routes. A slew of new entrants entered the market, but within 10 years, all but one airline (America West), had failed and ceased to exist. With long-term growth estimates of 4 percent for air travel, it's attractive for new firms to service the demand. It was as simple as having enough capital to lease a plane and passengers willing to pay for a seat on the plane. In recent news, the story about an 18-yr British...
The results of airline deregulation speak for themselves. Since the government got out of the airline business, not only has there been a drop in prices and an increase in routes, there has also been a remarkable increase in airline service and safety. Airline deregulation should be seen as the crowning jewel of a federal de-regulatory emphasis. Prices are down: Airline ticket prices have fallen 40% since 1978. Flights are up: The number of annual departures is up from 5 million in 1978 to 8.2 million in 1997. Flights are safer: Before deregulation, there was one fatal accident per 830,000 flights, now the rate is one per 1.4 million flights. So what's the problem?
There are several limitations in aviation infrastructure in India for instance parking bays, gates to board passengers, landing slots etc are in short supply. This often leads to massive delays, cancellation and major losses in revenue for many LCCs. For upgraded infrastructure facilities, India’s civil aviation minister Praful Patel said on 15 February 2006 that Indian government defer decision on privatization of International Airport in Delhi and Mumbai. The government aims to set up joint venture to operate these airports and offered 74 per cent stakes. Foreign direct investment (FDI) can hold up to 49 per cent in this transaction, while 25 per cent must be held by private Indian companies. Remaining 26 per cent to be held by Airport Authority of India (AAI) and other government PSUs.
Airports are vast facilities covering many acres of land where passenger beginning the flight portions of their travels. The first flight by the Wright brothers in Kitty Hawk, NC in 1903 only required a runway. As the technology of flight advanced to offer passenger service, there was soon a need for a building to manage passenger needs. Airports of today provide many key services needed for the traveler whether they are beginning, transferring, or ending their journeys. The demand for air transportation rises each year, according to the Department of Transportation (United States Department of Transportation, 2013) 815.3 passengers traveled by airplanes in 2012. With the demand expected to rise, airports must be able to keep pace with services. There are many different services provided however, this report will discuss terminal design, baggage handling, and ground access.
Political · The expansion of the European Union (EU)· BAA’s proposed Stanstead expansion· CAA’s new regulations on airport charges
The state owned airlines suffer the maximum from this problem. These airlines have to make several special considerations with respect to selection of routes, free seats to ministers, etc which a privately owned airline need not do. The state owned airlines also suffers from archaic laws applying only to them such as the retirement age of the pursers & hostesses, the labour regulations which make the management less flexible in taking decision due to the presence of a strong union, & the heavy control &interference of the government.