Owais Crawford
Airports can be owned and operated by either the public or private sector. While some airports are government-owned, others are privately owned and operated by private companies. In the United States, for example, the Branson Airport in Missouri is the only privately owned and operated airport with scheduled commercial service. On the other hand, London Heathrow Airport, one of the busiest airports in the world, is privately owned and operated by Heathrow Airport Holdings. Airports can also be owned and operated through public-private partnerships (P3s), where private entities assume certain responsibilities for public assets. P3s allow local governments to transfer financial risk to private partners while incorporating private sector innovations and investments.
Characteristics of Privately Owned Airports
| Characteristics | Values |
|---|---|
| Ownership | Owned by private companies or corporations |
| Examples | London Heathrow Airport, London Gatwick Airport, Rome Leonardo da Vinci-Fiumicino Airport, Zurich Airport, Copenhagen Airport, Branson Airport in the US |
| Management | May be managed by the private owner or outsourced to a private contractor |
| Funding | Funded by private capital |
| Profitability | Profits may be reinvested or distributed to shareholders |
| Control | Private owners have more flexibility in decision-making, free from government influence |
| Efficiency | May prioritize customer experience, innovation, and competitiveness |
| Registration and Licensing | Private airports must register and comply with safety and aviation regulations |
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What You'll Learn
Private vs. public enterprise
The debate around private and public enterprise in airports is complex and multifaceted. On the one hand, proponents of private ownership argue that private enterprise inherently provides better quality services due to its focus on efficiency and profitability. This view has driven airport privatisation in many countries, including Britain and Australia. In the case of Australia, major airports were privatised in the 1990s, leading to criticisms of monopolistic price-gouging and substandard services.
On the other hand, supporters of public ownership highlight the benefits of government control over a strategic asset. They argue that public airports can ensure investments are made based on technical and financial rationales rather than political cycles. Additionally, public airports can utilise various models, such as corporatisation, to balance public ownership with corporate management, as seen with Changi Airport in Singapore.
Comparing the quality of services between private and public airports is challenging due to the subjective nature of quality. However, one metric used for comparison is the Airport Service Quality (ASQ) Award, presented by Airports Council International (ACI). This award recognises superior performance in providing good-quality services to passengers and can indicate whether private or public airports are delivering better services.
While some airports are fully privately or publicly owned and operated, many airports operate under mixed ownership and management models. For example, Paris Charles de Gaulle Airport is run by a private company but is majority-government-owned, while Dubai Airport maintains public ownership while contracting specific services to private companies. These hybrid models allow for flexibility and the utilisation of private-sector capabilities while retaining public ownership.
Ultimately, the decision to involve the private sector should be based on specific objectives, such as financial, macroeconomic, or management goals. Different models, such as corporatisation, not-for-profit, service contracts, and management contracts, can be adapted to suit the unique circumstances of each airport and its governing body.
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Private airport registration
A privately-owned airport is an airport that is owned by a private company or individual, rather than by a government or public entity. While some airports are directly owned by the local government, others are run by private companies but are majority government-owned. For example, London Heathrow Airport is owned by Heathrow Airport Holdings, a private company. On the other hand, Paris Charles de Gaulle Airport is owned by Groupe ADP, which is 50.6% state-owned.
In the United States, there is only one privately-owned and operated airport with scheduled commercial service: Branson, MO, which offers seasonal flights to three other destinations. The majority of airports in the US are publicly owned and operated.
To register a private airport in the US, the owner or lessee of the proposed private aviation facility must first receive written approval from the FDOT (Florida Department of Transportation) prior to site acquisition, construction, or establishment of the facility. This is known as Site Approval and is subject to any reasonable conditions necessary to ensure safety for aircraft and protect public health, safety, and welfare. Site approval is granted only after it has been determined that all requirements set forth in Section 330.30(1), FSFS and Section 14-60.005, Florida Administrative Code (FAC), have been met.
After receiving site approval, the next step is to register the private aviation facility with the FDOT. This step must be completed before the operation of aircraft to or from the facility. The registration is valid for 24 months unless adjusted or revoked by the FDOT due to reasons such as facility abandonment or the site becoming unsafe.
To initiate the registration process, one must create an account for a new airport site approval and complete the self-certification of operation and configuration data deemed necessary by the FDOT. Additionally, to register a private-use airport with the FAA (Federal Aviation Administration), one must complete and submit FAA Form 7480-1 to the local Regional Office or submit the information electronically via the OE/AAA system.
For private aviation facilities with 10 or more based aircraft, a license can be requested from the FDOT after registration. The license ensures that the facility complies with all the necessary requirements to guarantee safety for aircraft and protect public health, safety, and welfare.
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Airport privatisation
In India, the government is currently in its third phase of airport privatisation, aiming to transfer operations of 11 airports to private companies by the end of the 2025-26 financial year. This move is part of a broader strategy to monetise state-owned assets and bridge the fiscal deficit, as well as raise revenue to address the country's budgetary shortfall. The selected bidders will be those who offer to share the highest revenue per passenger with the Airports Authority of India (AAI), ensuring a transparent bidding process.
The privatisation of airports in India has attracted major airport operators, including Adani Airport Holdings Ltd, India's largest private airport operator, and GMR Airports Ltd, which operates New Delhi's Indira Gandhi International Airport. The bundling of commercially viable airports with unprofitable ones is a strategic move to ensure that investors take on responsibility for loss-making airports while benefiting from the revenue streams of the profitable ones.
While privatisation is expected to enhance passenger experience and infrastructure development, there are concerns about its potential impact on airport charges, employment, and regional connectivity. Additionally, there may be muted interest from private equity investors due to the size of the airports being privatised, which could limit their efficiency and returns.
Privately-owned airports are subject to specific regulations and requirements to ensure safety, protect public health, and maintain aviation facility standards. For example, in Florida, private aviation facilities must register with the FDOT and comply with various sections of the Florida Administrative Code to obtain and maintain their licenses.
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Ownership models
Airports can be owned by either the public or private sector. In the United States, most airports are publicly owned, while many airports in Europe have been privatized.
Government Department or Ministry/Agency
The government owns and operates the airport, usually through a ministry such as transport or infrastructure. This model allows the government to maintain control of a strategic asset. However, investments may be influenced by political cycles rather than technical or financial considerations. An example of an airport operated through this model is Dubai International Airport.
Corporatization
An independent entity is created to plan and operate the airport. Changi Airport in Singapore is a successful example of this model, where an independent entity is responsible for planning and operations.
Not-for-Profit
This model is often used for regional or community airports and offers a vital service for certain communities. All profits are reinvested in the airport, and benefits are passed on to users.
Service Contract
This model allows publicly-owned airports to "buy" private capabilities. For example, Dubai Airport had a contract with Siemens Postal for their airport baggage handling service.
Management Contracts
The airport remains publicly owned, but contractors may be appointed to perform specific functions or operate the entire airport.
Majority Equity Sale/Divestiture
This model transfers control from the government to the private sector. An example is the Australia Airport Privatization Program. This model can be useful for mature markets when the government seeks to monetize its investment.
Public-Private Partnerships (P3s)
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 to private partners while incorporating private sector innovations and investments without fully privatizing public infrastructure. P3s can be used to develop entire airports or for smaller projects at airports of all sizes.
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Private airport management
Private Ownership and Management
London Heathrow Airport, for instance, is owned and operated by Heathrow Airport Holdings, a private company. This airport has been privatized and is no longer under the British government's ownership, as it once was. Similarly, London Gatwick Airport is predominantly owned by GIP, and Rome's Leonardo da Vinci-Fiumicino airport is owned by Aeroporti di Roma, with only a small percentage of government ownership.
Government Ownership, Private Management
Some airports are owned by the government but managed by private companies. For example, Dubai International Airport is owned and operated by the Dubai Airports Company, a government-owned authority. The management team, including key positions, is employed by the government. This model allows the government to maintain ownership of a strategic asset while benefiting from private sector expertise and investment.
Public-Private Partnerships (P3s)
P3s are long-term contracts where private entities assume specific responsibilities for public assets, such as building, financing, operating, and maintaining them. These partnerships allow governments to transfer financial risk to private partners while incorporating their innovations and investments. P3s have been used for various airport projects, including building and operating entire airports, redeveloping terminals, and smaller-scale projects. While P3s offer benefits, careful planning, budgeting, and risk management are crucial to their success.
Other Models
Other management models include corporatization, where an independent entity is responsible for planning and operating an airport, as seen with Changi Airport in Singapore. The not-for-profit model is often used for regional or community airports, reinvesting all profits into the airport. Service contracts allow publicly-owned airports to "buy" private capabilities, such as baggage handling services. Management contracts enable publicly-owned airports to appoint contractors to perform specific functions or operate the entire airport.
Registration and Licensing
Private airports must adhere to specific registration and licensing requirements. In Florida, for instance, private aviation facilities must register with the FDOT before operating aircraft to or from the facility to ensure safety and protect public welfare. Licensing can be obtained for facilities with ten or more based aircraft, subject to compliance with safety and public welfare regulations.
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Frequently asked questions
A privately-owned airport is an airport that is owned and operated by a private company.
London Heathrow Airport, London Gatwick Airport, Rome Leonardo da Vinci-Fiumicino Airport, Zurich Airport, and Copenhagen Airport are some examples of privately-owned airports.
Airports can become privately owned through a majority equity sale or full divestiture, where control is transferred from the government to the private sector.
Yes, Branson Airport in Missouri is the only privately-owned and operated airport in the United States with scheduled commercial service.
A private-use airport is an airport that is intended for the owner's personal use and requires registration and licensing, whereas a privately-owned airport is open to the public and can be owned and operated by a private company or individual.
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