Airports: Public Or Private Property?

Airports can be split into two types: public-use and private-use. Airport ownership is also categorised into two types: private ownership and public ownership. Interestingly, airport categories and ownership do not align. There are privately-owned, public-use airports. In the US, airports are largely self-sustaining and do not rely on local tax dollars. They are also locally owned and operated by public entities, including local, regional or state authorities. However, in Europe, many airports have been privatised.

Airports can be categorised as either public-use or private-use

In the US, airports are largely owned and operated by public entities, including local, regional, or state authorities. However, there is one privately-owned airport in Branson, Missouri, which offers seasonal flights to three other destinations.

In other countries, such as the UK, New Zealand, and Australia, many airports have been privatised. For example, London Heathrow Airport is owned by Heathrow Airport Holdings, and the major Australian airports were privatised in the 1990s.

Airport ownership falls into two categories: private or public

In other countries, such as the UK, Australia, and New Zealand, many airports have been privatised. For example, London Heathrow Airport is owned by Heathrow Airport Holdings, and the major Australian airports were privatised in the 1990s. In Europe, many government-owned airports have been transformed into companies, with some governments selling their shares, resulting in privately owned airports.

Public-private partnerships (P3s) are also becoming more common. These are long-term contracts where a private entity assumes certain responsibilities for a public asset, such as building, financing, operating, and maintaining it. P3s allow local governments to transfer financial risk while incorporating private sector innovations and investment.

Public airports are owned by local, regional or state authorities

Airports are considered essential infrastructure under state control. In the United States, for example, major airports like Hartsfield-Jackson Atlanta International Airport and Los Angeles International Airport are owned by local authorities. These entities are responsible for infrastructure development, maintenance, and the implementation of security protocols.

The US is unique in that it has way more airports than any other country, with around 14,000 airports or airstrips. This may be one of the reasons why nearly all US airports are government-owned, whereas, in the rest of the world, they are often privatized.

The primary advantage of government ownership lies in prioritizing public interests and enforcing regulatory measures to ensure safety and security. Such airports are funded through government budgets, user fees, and sometimes international aid.

Public airports are owned by local, regional, or state authorities. In the US, all but one commercial airport are owned and operated by public entities, including local, regional, or state authorities. These authorities have the power to issue bonds to finance some of their capital needs.

Public ownership of airports ensures that they serve broader public interests and adhere to national aviation regulations. It also allows for local leaders to make funding and operations decisions that directly impact their communities.

Private airports are profit-driven and may prefer international flights over domestic ones

While airports in the US are largely owned by the government, private airports are profit-driven and may prefer international flights over domestic ones. Private airports are driven by the need to make a profit, and international flights are often more lucrative than their domestic counterparts.

Private airports are often smaller and can offer a more exclusive, VIP experience. They are usually located closer to city centres, providing easy access and a quicker journey for passengers. These smaller airports also offer quicker boarding, with more efficient security checks and less crowded terminals. This is particularly beneficial for those travelling on private jets, who can avoid the crowds and long lines of commercial airports.

Private jets can access smaller, regional airports that commercial airlines cannot. These smaller airports often have lower landing and handling fees, making them a more cost-effective option for private flyers. They also provide quicker processing and easier access, with passengers able to arrive just minutes before their flight.

However, it is worth noting that not all private jets can access all smaller airports due to technical specifications and runway limitations. Additionally, some international airports may not have the necessary infrastructure to accommodate private jets.

Private airports are focused on maximising profits, and international flights often bring in more revenue. International flights are typically longer journeys, catering to a different clientele who are willing to pay more for the convenience and luxury of private travel. These flights also require various permits and overflight rights, which can increase costs. By catering to international flights, private airports can increase their revenue and provide a more exclusive experience for their clients.

While private airports may prefer international flights, it is important to consider the impact on domestic travel and the potential consequences for local economies. Some cities rely on flight access to stimulate their economy, and prioritising international flights could affect this dynamic. Ultimately, the preference for international flights at private airports is driven by financial incentives and the desire to provide a premium experience for a specific type of traveller.

Public-private partnerships (P3s) are long-term contracts where a private entity assumes certain responsibilities for a public airport

In the context of airports, P3s can take on various forms, including building, financing, operating, and maintaining the airport facilities. For example, a private developer might finance and construct a new terminal, and then lease it back to the airport authority, providing non-medical services while the airport provides medical services.

P3s offer several potential benefits, such as:

• Spreading the costs of investment over the lifetime of the asset, making infrastructure projects more affordable.
• A solid track record of on-time and on-budget delivery.
• Transferring certain risks to the private sector and providing incentives for proper maintenance.
• Lowering infrastructure costs by reducing construction and life-cycle expenses.
• Encouraging a strong customer service orientation by building satisfaction metrics into the contract.
• Enabling the private sector to focus on outcome-based public value.

However, P3s also have their challenges and critics. They are structurally more expensive than publicly-financed projects due to the private sector's higher cost of borrowing, resulting in higher interest costs for users or taxpayers. There are also concerns about lower public returns on investment compared to private funders, issues of accountability, and a lack of transparency surrounding financial details.

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