Privatization of Airports

This case study will discuss the pros and cons of operating an airport with a government-operated system of security versus returning to a privately owned and operated security organization. The Transportation Security Administration (TSA) was introduced to the airline industry after the attacks on September 11th, 2001. Complaints of slow wait times during periods of heavy traffic and the ability to manage the labor force have recently sparked an interest of Airports switching their security to a privatized company.

In some cases where products produced by the government are subsidized then privatization leads to an increase in prices, when the government owns these firms then the consumers will experience a reduction in the price of goods and services produced by these firms and therefore gain.

For decades, all Canadian airports were managed directly by the federal aviation regulatory authority Transport Canada. In the early 1990s, the federal government analyzed options to reduce financial subsidies in the management of public airports. In 1994, Transport Canada instituted the National Airports Policy, whereby it privatized airport operations to newly formed airport authorities that are non-profit capital corporations. All four of Air Canada’s hubs were

Virtually all commercial airports in the United States are owned by state and local governments. But around the world, airports are becoming viewed more as business enterprises, and less as monopoly public services. Governments in both developed and developing countries are turning to the private sector for airport management and development. There are two different types of privatizations; partial and full. Partial privatization refers to strategies where partial control and at least a portion of ownership remains with the public owner. Full privatization refers to strategies where the complete control and/or operation of an entire airport are vested with a private entity through a long-term lease or sale. The United States has not privatizes because the airports still has repayment of grants, airport revenues can only be used for airport purpose and airlines have too much say because of long term lease contracts. There is a Airport Privatization Program that started in 1997 to privatize airports. They started with 5 airports and expanded to 10 airports in 2010. The experiment is ongoing so it is hard to tell if it work yet. So, everything runs smoothly on the inside of the airport? Security is well oiled

With the rapid growth of commercial air travel in the 1970s, the FAA recognized that the nation’s airports contributed significantly to the national economy and international commerce, as well as being a critical mode of transport for the public. Airports needed funding to improve safety and maintain airport infrastructure such as runways, taxiways, NAVAIDS, and land acquisition. The Federal Aviation Administration (FAA) formed the National Airport System Plan (NASP) to ensure these significant airports received Federal grants to make these improvements. The FAA revised the NASP with the Airport and Airway Improvement Act of 1982 and called the National Plan of Integrated Airport Systems (NPIAS) to reflect the further expansion.

Although there is no doubt that the presence of an airport has greater positive impacts on a surrounding community from an economic standpoint, the presence of an airport, much like any large industrial complex, unfortunately impacts the community and surrounding natural environment in what many consider a negative manner. These effects are a result of activity whose sources is the airport itself and of vehicles, as well as both aircraft and ground vehicles, which travel to and from the airport (Alexander T. Wells, 2004).

Within the past decade, there has been large talk about ATC privatization. Air Traffic Control (ATC) are the individuals which keep the aircraft operating efficiently and safely while in the national airspace system. ATC Privatization is removing the air traffic control services out of the government's hands and into a privatized corporation. The FAA or Federal Aviation Administration, is a branch of the Department of Transportation which is solely responsible for the rules and regulations in which certificated pilots must adhere to when operating aircraft within the United States national airspace system.

Small regional airports struggle with leakage to larger airports that provide primary service to metropolitan areas. Small catchment areas and few services to communities with smaller population densities create a constant struggle for small regional airports to attract and retain commercial air services (Wittman, 2014). Small regional airports must focus on increasing revenue potential in order to fund operating improvements and must keep a high level of customer satisfaction to retain old customers and obtain new customers. The Airport Cooperative Research Program (2009) found that parking revenue is on typically 25% all airport revenue and is approximately 40% or more of non-aviation revenue. This makes airport parking the highest revenue source of U.S. Airports, and is often used to provide funding to support other operations. Airport parking is also in many cases the first and last point of interaction users will have with the airport. The particular significance of this study is that it addresses parking supply needs for small regional airports in terms of parking facility growth management and revenue retention needs. Most studies look at primary hub airport parking supply needs, and do little to address the public parking needs of small regional airports. Studies that look at small regional airports tend to focus on the aviation revenue and space occupancy with little to no mention of aspect of non-aviation operations such

Airports play a vital role in today’s age. They allow anyone to travel to any destination with ease and allow business to be carried out on a global scale. Aircraft operating in and out of airports can move businessmen and woman to destinations around the world so that they may carry out their business, as well as cargo operations. Local airports attract businesses to them which helps out local economies, and global economies when

privarization is the process transferring the ownership of a business, companies, agencies,public service, or public property from the public sector (a government) to the private sector . this private sector either to firm that operates for a profit or to a non profit orgainization. moreover, it also means that the government outsourcing of functions or capacities to private firms. governments in developing and developed countries have been privatizing state-owned enterprises (SOEs) for two decades now economic.experts and academics have used many pages and researchs to investegate the usage and outcome of these privatization endeavors in nations around the world.privatization gaineed considerable momentumin the developing countries in the 80s .The motives were many, but the hope for higher economic efficiency underlined the expectations of the implementing governments and agencies in the developing countries. While the merits of a market-based economic system are well established under certain theoretical conditions, far less is known of its empirical relevance in the developing world (..). many governmets in developing countries promotes privitization to improve the economic performance in

Privately-owned and operated airport security systems exist almost entirely for labor management. Some small airports currently use privatized security because of the great impact that even one delayed plane can make. Because contractors are more flexible with their hiring and firing processes, it is easier to maintain

Private enterprise and business are under the state’s guidance. It does not mean that state replaces private ownerships directly, however, it seeks to intervene and guide private sectors according to national strategies;

For instance, after the privatisation of BT and British Airways in the UK, they have been improved efficiency and higher profitability thereafter. Shleifer (1998) has also supported that private firms seem to do better than state ownership with a lower costs and quality improvements. Furthermore, there are substantial lower costs and higher productivity in many services in private sectors (Savas, 1982). Therefore, overall consumers would benefit with the competition of private companies, such as lower costs, development of new products and quality, etc.

In United states, commercial airports have traditionally been independent of the national control, operated locally by local or regional authorities and highly influenced by private interests, specifically the airlines (with enough power to decide major facets of airport management and development). While the other degree of participation of private interests in airports differs broadly among states and cities, major U.S. commercial airports are operated through partnerships between the government, local interests and private firms.

Airlines and passengers have not generally been in the position to unbundle the overall package of airport services and only pay for what they want. However the emergence of the low cost carrier industry has created new challenges for airports in this area and is causing a number of airports to consider splitting up their services and to offer a differentiated product to different airline types. This is because low cost carriers have very different needs from the conventional carriers to ensure that