Privatization of airports in Asia

It has been claimed that Asia lags behind the rest of the world in the privatization of airports. At the same time, the air transport sector has been growing quickly and this has placed enormous pressure on airport infrastructure. This paper reviews the situation and finds that the private sector is involved extensively with new airports and the upgrading of existing airports in Asia. Although the models used to accommodate the private sector appear similar to those used elsewhere, governments in Asia have retained majority control in every case. Despite the fact that some governments say that efficiency is important to them, the most common and important motive in “privatization” in Asia is to mobilize a new source of finance. Airports remain high on the agenda of public policy. Governments are concerned about abuse of monopoly powers and they want to cross-subsidize regional airports, but they lack the institutional strengths to regulate effectively. By retaining majority control, however, governments risk losing the efficiency benefits of privatization. The paper explores the reasons why airports are such difficult cases to deal with and concludes that there is a greater need than ever to be able to compare the performances of airports.     

Airport partial and full privatization in a multi-airport region: Focus on pricing and capacity

This paper studies the capacity and pricing choice of two congestible airports in a multi-airport metropolitan region, under transition from a pure public, centralized airport system to partial or full privatization. We develop analytical models to investigate three privatization scenarios: public–private duopoly, private–private duopoly, and private monopoly. We find that, airports follow the same capacity investment rule as prior to privatization when capacity and pricing decisions are made simultaneously. Pricing rule after privatization becomes more complicated, with additional factors having an upward effect on the privatized airport(s) and a downward effect on the remaining public airport.     

Airport privatization with public finances under stress: An analysis of government and investor's motivations

The management model of airports has long stood as a central research area in the transport sector. There are a wide range of studies that focus on the potential benefits and pitfalls of private airport management. The results of these efficiency studies have not provided irrefutable evidence for the superiority of private management over public management, but the momentum towards privatizing airports is growing. The reason for privatization has been more related with privatization revenues for governments, rather than more efficient management. The search for maximizing the sale value can have negative impacts from a welfare perspective, for example, through excessive increases in tariffs for passengers. This research reflects on the motivations for governments to privatize, and is illustrated by a case study – Portugal – in which the privatization occurred as a result of three main large drivers: 1) a bailout programme by the IMF, the EU, and the ECB; 2) a revision of the regulatory model, and; 3) the need to increase the capacity of Lisbon's airport system in the medium term.     

Factors affecting airport access mode choice for elderly air passengers

This research investigates whether elderly air passengers exhibit different mode choice behavior in regard to airport ground access. Using survey data from a Taiwanese sample, our results show that elderly air passengers prefer to ask family members to drive them to the airport, while general passengers prefer to take a taxi. The results also indicate that “safety” is the most important item in the choice of access mode and “user friendly” and “convenience for storing luggage” as the next most important items for the elderly. Elderly passengers are found to be less likely to use public transport than private transport. Factors such as “possessing a car in their household”, “carrying more luggage”, “spending more time spent in the vehicle”, and “higher ticket prices for public transport” increase the propensity for the elderly to use private transport.     

Airport ownership and financial performance: Evidence from Italy

In the past few decades many countries have increased the presence of various forms of private sector involvement in airport ownership and management. This paper focuses on the financial performance of Italian airport companies. We present empirical evidence separately for two groups where public or private management majority prevails. The main findings indicate that companies with a private majority outperform the others in terms of financial indicators that are related to operating income.     

The partially private UK system for air traffic control

This paper reviews the publicly stated motives for establishing the UK system for air traffic control as a public–private partnership in 2001, and the significance of this public–private partnership as an example for the reform of other systems. It examines the performance of the PPP up to the present time in terms of safety, delays due to air traffic control, efficiency and financial performance. It attempts to relate actual performance to what would have occurred under alternative arrangements. It concludes that there is no demonstrable change due to the public–private partnership other than the financial result. It argues that the financial expectations of advocates of the PPP have not been fulfilled.     

Canadian airport security: The privatization of a public good

Economic theory would define airport security as a public good; no different than border control or the military, but this is not how it is treated in many countries. In Mexico, airport security is financed entirely from the public treasury. In the U.S., the cost is split evenly between air passengers and the public treasury. In Canada, air passengers pay the entire cost of airport security. The Canadian case is examined in detail. Forcing air passengers to bear the full cost of airport security creates a number of economic distortions. Air travel in Canada is discouraged by the added cost of security, but worse it encourages travelers to cross the Canada-U.S. border where they can fly from lower cost U.S. airports. The tax losses to the public treasury because of this policy are arguably greater than the total security fees collected.Airport security evolved organically rather than by design because governments were forced to react quickly to escalating threats. As a result, a “user-pay” financing system was put in place in Canada without careful policy analysis.     

Urban rail transit PPPs: Survey and risk assessment of recent strategies

The proliferation of urban rail transit public–private partnerships (PPPs) in Latin America and Southeast Asia is a recent phenomenon. This paper first reviews the theoretical literature on the public procurement versus PPP decision in the context of rail transit and assesses the risks involved in entering these partnerships. The urban rail transit PPP approaches adopted in Bangkok, Kuala Lumpur, Buenos Aires, Rio de Janeiro, Singapore, Hong Kong, and London are described and classified into four broad approaches: (i) the development of new systems through Design-Build-Finance-Operate (DBFO), (ii) the concessioning of rail and subway services, (iii) the sale of state-owned operators through share issue privatization, and (iv) PPPs for infrastructure maintenance and upgrading. The different risk allocation strategies adopted under each of the above approach are analyzed for the extent to which they correspond to the theoretical recommendations. The concluding section provides a summary of the trade-offs that policy makers make when deciding between alternative strategies.     

Privatization,corporatization, ownership forms and their effects on the performance of the world's major airports

This paper focuses on measuring and comparing productive efficiency and profitability among airports owned and operated by government departments, 100% government-owned corporations, independent airport authorities, mixed enterprises with government majority ownership and mixed enterprises with private majority ownership. The analysis is based on a cross-sectional, time-series dataset (2001–2003) for the major Asia-Pacific, European and North American airports. There is strong evidence that airports with government majority ownership and those owned by multi-level of government are significantly less efficient than airports with a private majority ownership; there is no statistically significant evidence to suggest that airports owned and operated by US government branches, independent airport authorities in North America, or airports elsewhere operated by 100% government corporations have lower operating efficiency than airports with a private majority ownership; airports with a private majority ownership achieve significantly higher operating profit margins than other airports; whereas airports with government majority ownership or multi-level government ownership have the lowest operating profit margin; and generally, airports with a private majority ownership derive a much higher proportion of their total revenue from non-aviation services than any other category of airports while offering significantly lower aeronautical charges than airports in other ownership categories excluding US airports. The results suggest that private–public–partnership with minority private sector participation and multi-level governments’ ownership should be avoided, supporting the majority private sector ownership and operation of airports.     

Are they telling the truth? Revealing hidden traits of satisfaction with a public bike-sharing service

Public bike-sharing systems (BSSs) are an emerging mode of transportation introduced by municipalities to solve congestion problems in metropolitan areas, especially when integrated with other types of transportation. In the last years, the number of public bike-sharing services has been constantly on the rise all over the world, and generally the overall satisfaction with them is high. However, satisfaction with public services is driven by mechanisms that can differ from those in the private sector. It is important to establish to what extent a high satisfaction is genuine or simply ephemeral. Even “old” public services (like public transportation) become “gold” when accompanied by the introduction of new technologies. In this paper we analyze this phenomenon using data from a satisfaction web-survey conducted among customers of the public BSS “BikeMi” in Milan, Italy, in a period when mobile technologies have been introduced to speed up the service. On analyzing the responses to satisfaction questions using simple summary statistics, the level of satisfaction resulted very high. However, our aim was to look for potential “darker” sides of the service by detecting possible hidden satisfaction components. For this purpose, we used the Nonlinear Principal Components Analysis, which is particularly powerful in this context. A simple textual analysis was also performed as a validating test. Results from our analysis indicated that satisfaction is flawed by a set of factors like the mechanics of the bikes, the picking and dropping system, and the apps used to organize the service. Less concern was detected for more general aspects of the service.     

Air traffic forecast and its impact on runway capacity. A System Dynamics approach

The uninterrupted growth of air traffic in Colombia has been reinforced since the 1990s by a public policy of liberalization of airspace, and by redirecting public and private investment towards the modernization and updating of airport infrastructures, giving in concession the busiest airports in the country, 19 to date. In the commercial air sector, and in this same period, the flag airline was privatized and new air operators, including low cost airlines (LCC), entered the market. Since 2012, air fares are completely deregulated. Consequently, in the last two and a half decades, passenger transport in Colombia grew by 863%. This important growth rate has been driven and led by the country's main airport, the Bogotá-El Dorado International Airport (BOG), in the capital of Colombia. But some technical reports consider the airport will reach its maximum capacity in the short term mainly because of its inability to expand its airfield (runway system). Due to this circumstance, the aeronautical public authority of Colombia gave course to the planning, design and construction of a new airport (complementary) on the outskirts of the city of Bogotá, which will enter the design phase in 2026/2027. Therefore, it is considered suitable the development of a traffic forecast for BOG in the medium term and to evaluate the impact of future demand on the runway capacity of the airport. Then, and due to the complexity of the air transport forecast, the use of System Dynamics (SD), is considered to be appropriate as an analysis approach. System Dynamics is based on feedback control theory and it is equipped with mathematical computer simulation models, which uses linear and non-linear differential equations. The results suggests a need to expand the airport case study (runway system) after mid-2019, where the current capacity utilization factor is around 100% and two to three runways will be required for the normal operation; after October 2022 the number runways required is set to three until the last period simulated (2023).     

A decision framework for successful private participation in the airport sector

As private participation in public airports becomes a global trend, there are a number of concerns and debates over the conflicting interests of the private and public sectors. For instance, the private sector's interest in maximizing profits often opposes the public sector's interest in protecting the public interest and social welfare. In this paper, we reframe the conflict in terms of principal-agent theory, and inform policymakers to understand public-private management problems in a broader context. Firstly, we demonstrate how various ownership and governance structures shape the private participation based on (1) ownership-type, (2) mode of ownership shift, and (3) ex-post government control. Secondly, we then highlight that this process should be context-based, and examine the recent case of Incheon International Airport (IIA) in South Korea to illustrate the importance of contextual factors. Lastly, we provide comprehensive recommendations to policymakers involved in bringing private partners into the airport sector, which include setting a clear agenda, exercising a reasonable level of control, understanding the sharing of risk and responsibility under different structures, and assessing technical, economic and political factors that may affect the policy outcome.     

我国铁路民营化过程中的障碍分析

铁路民营化已成为世界各国铁路改革的潮流,我国在铁路民营化方面也积累了一些经验,但在铁路民营化改革中仍存在诸多障碍,针对民营企业进入铁路行业的“沉没成本”和“接入价格”的问题,提出了借鉴国外经验、改革铁路管理体制和线路收费机制等建议对策。     

A price forecasting model for predicting value of commercial airports: a case of three Korean airports

As the privatization of airports progresses throughout the world, the economic value of these strategic assets must be determined from a commercial perspective, rather than the economic impact perspective, which is typically used by governmental agencies to justify their construction. This paper applies financial theory of asset valuation to commercial airports. The authors have selected three airports for valuation purposes: Gimpo, Kimhae and Jeju. These airports are ranked top three in terms of annual traffic volume, among the 16 airports operated by Korea Airport Corporation (“KAC”). The authors estimate the intrinsic value of three major airports; Gimpo, Kimhae, and Jeju based on the discounted cash flow (DCF) model at $1.8 billion. The ultimate price achieved depends on the individual expectations of potential buyers, their opportunity costs and entrepreneurial abilities, as well as the ensuing negotiations. This paper, therefore, provides a benchmark for determining airport valuation in the event of privatization.     

Estimating the impact of airport privatization on airline demand: A regression-based event study

This paper develops an empirical model of passenger demand for routes of airports subject to either imminent or recent privatization. We investigate whether the privatization process produces a sequential impact over traffic. By employing a regression-based event methodology and controlling for fixed effects, price endogeneity and sample selection, we perform an econometric analysis of pre-privatization and post-privatization dynamic patterns of demand to infer the demand consequences of the major change in airport governance. We examine recent Brazilian airport privatization experience as a case. The main results suggest that privatization produced an overall increase in airline demand and that the airport notably recognized with the greatest demand potential and with the largest market penetration of a fast-growing low cost newcomer had the highest estimated ceteris paribus effect of privatization on demand.     

Determining the relationship between ownership and technical efficiency by using a dynamic stochastic production frontier approach

This study adopts dynamic stochastic production frontier approach. Because of the impact of quasi-fixed inputs, airports cannot immediately adjust their production processes. Based on the heterogeneity of public and private airports’ operation models, this study estimates their individual production adjustment speed and their short-run and long-run technical efficiencies to compare transnational airport business performance. The results reveal the differences in the production adjustment of airport groups under different ownerships and performance. Private airports have faster production adjustment, whereas public airports have higher short-run and long-run technical efficiencies. As their primary goal, public airports should strive to increase the elasticity of production adjustment to increase the production adjustment speed, thus improving their long-run technical efficiency. On the other hand, private airports should prioritize eliminating short-run inefficiency to increase their actual output level, thereby improving their long-run technical efficiency.     

The Italian airport industry in transition: a performance analysis

This paper analyzes the impacts of Italian government actions on the efficiency of 36 airports between 2001 and 2003. The changes have included privatization, enlargement of the services provided directly by airport management companies, through the modification of the concession agreements, and the creation of two hubs. The analysis, using the consolidated two-stage data envelopment analysis with bootstrapping, indicates that airports with a majority public holding are on average more efficient and the presence of two hubs is source of inefficiency.     

Exploring different nationality perceptions of airport service quality

In order to attain a sustainable competitive advantage, airports should strive to enhance multicultural passenger satisfaction through the provision of high quality services. The purpose of the current study is to determine the specific service quality components that can lead to increased traveler satisfaction in an international airport environment, and to evaluate the degree to which passenger perceptions of airport facilities, as well as levels of satisfaction, vary according to different nationalities. In order to achieve this objective, this paper examines the equivalence of service quality and satisfaction measures by applying the Rasch modelling technique. Airport service quality is found to be comprised of three distinct dimensions, namely “Servicescape and Image”, “Signage” and ”Services” and significant differences with service quality perceptions are exhibited among travelers of different nationalities. Overall, the results highlight the need to assess scale equivalence across different nationalities.     

Total factor productivity analysis of the UK airport industry: A Hicks-Moorsteen index method

This study examines the total factor productivity (TFP) change of the UK airport industry from 2001 to 2009 using a Hicks-Moorsteen index method. The results show that the industry experienced an average annual growth in TFP of 0.32 per cent with efficiency change being the main contributor to the TFP growth. We find that private UK airports enjoy slightly higher TFP growth than those in public or mixed ownership. Regulation and airport size are found to have statistically significant effects on the airport productivity level.     

Economic measures of tourism yield: what markets to target?

An understanding of the yield potential of different source markets and segments can underpin destination marketing by both public and private sector organisations. The standard yield measure relates to expenditure injected into a destination from different market segments. This measure has several limitations, which are discussed in the paper. With the increasing sophistication of economic models such as computable general equilibrium, models, it is now feasible to develop new and more useful measures of tourism yield, which directly measure the gains to different stakeholders. Several economy‐wide impact measures of yield are developed and contrasted for selected Australian inbound tourism markets. The measures produce conflicting signals for public and private sector tourism marketers and planners. The reward from further research in developing and operationalising yield measures is more informed policy‐making by destination managers in respect of destination marketing and new product development, resulting in greater economic gains from inbound tourism. Copyright © 2008 John Wiley & Sons, Ltd.