Privatize the Airports!

By Reed, Lawrence W. | Freeman, February 1999 | Go to article overview

Privatize the Airports!


Reed, Lawrence W., Freeman


Waiting in long lines for everything from a boarding pass to a cheeseburger. Slow luggage delivery. Expensive parking. Jammed concourses. Surly workers. Small, dingy restrooms. Long walks from one flight to another that leave you worn out, with the only "consolation" being that the connecting flight is delayed anyway.

All that may sound like a scene from a Woody Allen movie set in some banana republic, but to midwestern travelers it rings with familiarity. It's just another day at Detroit Metro Airport, owned and operated by Wayne County, Michigan.

Thirty-six U.S. airports recently commissioned a survey of 90,000 passengers, who ranked Detroit dead last for overall quality. The poor rating comes despite hundreds of millions of dollars and many commendable efforts by county and airport officials to make Detroit Metro, in the words of director David Katz, "the most friendly place on the planet." Good intentions and lots of nice new carpeting notwithstanding, the aging airport is simply not keeping up with exploding traffic volume. The planned opening of a long overdue additional terminal in 2001 will help, but realizing Katz's ambition probably will require something much more dramatic and fundamental.

Twenty years have passed since Congress deregulated the domestic airline industry. With airfares down and traffic volume up considerably, airports like Detroit's have experienced problems of congestion and a general decline in the quality of services. Though the general public is aware that airlines were deregulated (specifically, their fares and routes), what is much less known and appreciated is that almost all airports remain largely outside the marketplace, hostage to political decisions and budgetary concerns of the government entities that own and manage them. For consumers, the market has worked well in the skies. It's on the ground, where politicians and their employees rule the roost, that problems often seem frustratingly intractable.

These problems don't have to exist. A growing number of governments around the world are ending similar troubles, but they're doing so by making more than cosmetic changes. They are realizing that private forprofit firms have the incentive and the expertise to operate airports better than almost any public, politicized bureaucracy. These governments are privatizing the management and in some cases even the ownership of their airports. The results are impressive: privatized airports are far more innovative, efficient, and responsive to consumers than are public ones.

Twelve years after Great Britain sold seven of its largest airports in 1986-including Heathrow, Gatwick, and Glasgow-the program has proven successful by every measure. An astonishing 2.2 million citizens bought 1.4 billion shares in the newly privatized British Airports Authority (BAA). The flying public has been greeted with an aggressively entrepreneurial attitude aimed at pleasing customers. The airports themselves have undergone substantial physical improvements, and the British treasury has stopped being drained by subsidies.

The British model is spreading. Patrick Cowell, president and CEO of Airport Group International, reports that, "countries from Germany to Australia are now racing to privatize their airports." Operation and management of most of Canada's largest airportsincluding Vancouver-are now in private hands, as is air traffic control. …

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