Govts urged to rethink airport privatizations

GOVERNMENTS should be cautious in privatizing airports as this might not benefit airlines and their passengers, the International Air Traffic Association (IATA) warned on Tuesday.

In a statement, IATA Director General and Chief Executive Officer Alexandre de Juniac said the industry was “in an infrastructure crisis” and that “cash-strapped governments are looking to the private sector [for]answers.”

International Air Transport Association (IATA) Director General and Chief Executive Officer Alexandre de Juniac speaks at a press conference at the annual meeting of global airlines in Sydney, Australia, on Monday. AFP PHOTO

“Airlines have not yet experienced an airport privatization that has fully lived up to its promised benefits over the long term,” he added.

“It is important that governments take a long-term view focusing on solutions that will deliver the best economic and social benefits. Selling airport assets for short-term cash injection to the treasury is a mistake.”

“IATA research shows that private-sector airports are more expensive. But we could not see any gain in efficiency or levels of investment. This runs counter to the experience of airline privatization, where enhanced competition resulted in lower pricing to consumers.”

“So we don’t accept that airport privatization must lead to higher costs. Airports have significant market power. Effective regulation is critical to avoiding its abuse, particularly when run for profit by private-sector interests.”

IATA resolved to urge governments to focus on the long-term economic and social benefits of an effective airport; learn from the positive experiences of corporatization, new financing models and alternative ways of tapping private sector participation; make informed decisions on ownership and operating models to best protect consumer interests; and lock-in the benefits of competitive airport infrastructure with rigorous regulation.

Poorly planned airport privatization puts the efficiency and cost-effectiveness of air transportation at risk, according to the IATA chief.

“There is no one-size-fits-all solution. A broad range of ownership operating models exist that can meet a government’s strategic objectives without a transfer of control or ownership to the private sector,” de Juniac said.

“Governments need to evaluate the pros and cons of different models, taking into account interests of all stakeholders, including airlines and customers,” he added.

“The most important thing is that airports meet the needs of customers and airport infrastructure users, at a fair price. And to do that, user consultation must be an integral part of the consideration process.”

De Juniac’s statement came a day after his organization reduced its expected collective net earnings of airlines for this year, from the $38.4 billion (P2.02 trillion) projected last December to $33.8 billion (P1.78 trillion), because of increasing fuel and labor costs.

It also came after IATA warned governments to tackle a capacity crisis facing airports as demand for international travel grows, and that they should be cautious about private-sector involvement.

According to the group, the number of passengers are projected to nearly double to 7.8 billion by 2036, yet infrastructure such as airports and air-traffic control systems were not keeping pace with the growth.


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