Airports have historically been regarded as public utilities to be operated and supported by central and local governments. Whilst many airports throughout the world still have some form of public sector ownership, the degree of operational control exercised by central governments has in recent times become more balanced against greater participation from private sector interests.
Airport privatization has normally been driven by governments seeking to avoid funding ever-growing airport capital requirements and airports realizing an opportunity to divest high asset values to reduce debt or provide investment opportunities in other areas. Hence, since the mid-1980s there has been a substantial shift in many countries towards airport development and ownership being funded by the private sector and managed and operated on a commercial basis.
Airport privatization ‘means the infusion of capital by private sectors to gain partial or total control over airport activities and facilities’. Partial airport privatization ‘typically implies the involvement in some manner or other of a private investment or management firm in airport operations and/or capital improvement projects. However, privatization, though effective at raising significant amounts of money for governments, is no guarantee for the long-term success of the airport; airport privatization is, therefore, a tool rather than a solution to the many problems that airports confront.
The British government was the first government to privatize its airports, followed by South American airports and Australian Airports. Undoubtedly pressures to privatize airports are spreading, largely because governments are increasingly reluctant to continue funding airport development themselves when they feel that airports have the financial strength to raise and pay for their own capital investment requirements. Clearly, there are benefits and risks of airport privatization.
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