About 14% of airports around the world, which handles 40% of global traffic, have been privatized.
But “Airlines have not yet experienced an airport privatization that has fully lived up to its promised benefits over the long term,” revealed International Air Transport Association (IATA) Director General and CEO Alexandre de Juniac in yesterday’s 74th Annual General Meeting (AGM).
“Selling airport assets for a short-term cash injection to the treasury is a mistake,” he stressed. “Airports are critical infrastructure. It is important that governments take a long-term view focusing on solutions that will deliver the best economic and social benefits.”
Hence, IATA urged governments to take a cautious approach with airport privatization and prioritize long-term economic and social benefits of an effective airport over the short-term financial gains of a poorly thought-out privatized one.
“We are in an infrastructure crisis. Cash-strapped governments are looking to the private sector to help develop much needed airport capacity,” according to the CEO. “But it is wrong to assume that the private sector has all the answers.”
Private sector airports are more expensive, IATA research showed. “But we could not see any gains in efficiency or levels of investment. This runs counter to the experience of airline privatization where enhanced competition resulted in lower pricing to consumers.”
“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,” De Juniac underscored, citing that five of the top six passenger ranked airports by Skytrax are in public hands.