, the country cannot develop.
The common operating factors are:
Competition exists for investor dollars with other forms of real estate - malls, offices, developable land. The author of 'US Airport Privatization' speculated in 1993 that the market for airports was not a speculative one. Now, market opportunities are being found in airport privatizations.
Developers may not want to work with the government bodies, which regulate airports and airlines, or to be tied to a long-term investment. Developers would look for opportunities that facilitate adaptability to changing market conditions. Only a long-term
strategy would work in this investment.
The labour contracts in force when the ownership switches over from public to private would likely have to continue, hindering potential private operators.
Property taxes would have to reflect enhanced market value of an airport property. Most of an airport's real estate is empty land, and therefore not directly capable of providing a profit to an operator.
Any airport has relations with the surrounding communities, but a private operator would be unable to negotiate in an area of government responsibility.
In addition, other challenges, which may have hampered airport profitably before privatization, remain. These include security, air traffic growth, airline strategies, airport competition, and international incidents such as SARS or terrorism.
Political interference is always a possibility in the area of airport regulations, industry deregulation, and the changing nature of the airline industry.
A conflict exists between the desires of a private operator to have looser regulations and the need for government oversight of the industry.
Objections to airport privatization are related to the monopoly that airports represent in air travel (Graham 2008, 16). The fear is that the private operator will make a profit that could have gone to the government. These fears are addressed by the nature of private enterprise, which seeks to run a business profitably.
Potential Economic Benefits of Airport Privatization
Originally airports were considered to be part of a nation's essential infrastructure, and less attention was paid to profit than to operations (Frost & Sullivan). The three means of economic gains to be found in privatization are: improvements in operating efficiency: the private for-profit business model more often leads to a further exploration for means to cut costs and boost revenues than does public management; the introduction of new management styles and marketing skills directed to serve users with a more consumer-oriented approach; and the ability to make better investment decisions.
The trend in many countries is now to contemplating the potential for profit from an airport. The example of the Vienna airport will serve to illustrate how privatization in a developed country can benefit an airport's operations. Before 1978, the airport was a public utility and had to seek subsidies to cover losses. In 1978, the airport management was reorganized so it would work like a commercial enterprise, but with public sector shareholder ownership. A further reorganization took place in 1992 to address industry and customer needs separately from the service divisions. Measures such as strategic planning and cost
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