I. Executive Summary

Airports have evolved mainly as government-run enterprises. Now, many airports seek privatization in part to improve their abilities to compete in the new global economy. The manner of ownership covers a wide spectrum: government-owned and controlled airports, government-owned corporations, independent airport authorities, public-private partnerships with government majority ownership or with private majority ownership. Reasons to privatize an airport include an improved ability for an airport to diversify its operations to enhance profitability, to fund expansion, and to improve competitiveness. The arguments for privatization include that the falling availability of public funds, and a need to change to the market-oriented outlook that private businesses develop. Objections to airport privatization are related to the apprehension that a private operator will take advantage of the monopoly that airports represent in air travel. Not all airports are suitable for privatization. Some in the developed world, such as in the USA, are controlled by local governments and affected by airline requirements. The less developed countries and their airport authorities lack sufficient funds to develop their airports; although these countries need these airports, privatization is impractical, and alternate business plans must be developed. Unlike other countries, Canada, Australia, and New Zealand have taken the path of mixed public-private control to maintain power over matters that affect the public good. Privatization enables a long term focus to meet the demands of international competition, to maintain a customer-focused plan, and to free the government from providing subsidies to an unprofitable enterprise. The potential for Canada to completely privatize the National Airport System Airports is small due to the serving of the public good under the current system.

II Introduction

Airport privatization has become a trend in the past thirty years as economies change and the air transport sector matures. Airport management and ownership, once mainly the domain of governments, has evolved into a mix of public and private airport ownership. Airports must now compete with other airports around the world for business, and government may not be the best owner for a globally-competitive enterprise. Airports must have the freedom to compete on the commercial level, and not just provide a service to the travelling public. Airports seek privatization in part to improve their abilities to develop a customer-focused business plan. This paper will present a review of the history of privatization and predictions for the future of this trend, and a comparison of the means, effects, and relative success of government/ public vs. private control.