Airport monopolies fail airlines and their passengers

Monopoly private ownership of airports has not benefited airlines or passengers said the International Air Transport Association director general and CEO as he seeks to persuade governments to keep control of key hub airports. Chief correspondent, Tom Ballantyne, reports.

December 1st 2017

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Privatized airports have been a failure with no country or government able to efficiently regulate them, the International Air Transport Association director general and CEO, Alexandre de Juniac, said at a recent industry conference in Taipei. Read More »

They have increased fares and the costs to airlines of operating into the mainly monopoly airports, he said, as airfares have decreased significantly. “We have not seen a major improvement in quality of service offered by privately run airports that justifies the increased fees and charges,” de Juniac said.

'Our message to governments on infrastructure is that airports perform better in public hands'

Alexandre de Juniac International Air Transport Association director general and CEO

Speaking at the annual Assembly of Presidents of the Association of Asia Pacific Airlines, he said the “top five airports on the planet” are government owned. They are always on lists of airports worldwide for top quality and service delivery. Hong Kong, Singapore and Seoul Incheon lead the group, followed by Dubai and Amsterdam, he said.

“Privatized airports are difficult to regulate because shareholders must receive their returns. Secondly, they are operated by budgets and not for aviation interests. Governments need money so they privatize airports. The interests of aviation are very remote,” he said.

“Perhaps the most worrisome point is that when governments privatize public entities, whether they be local or national, they wash their hands about this infrastructure, which is absolutely monstrous.

“A concerned government should take care of its airport. It is the key entry point or one of the key entry points of the country.”

He said that in the struggle to fund infrastructure investments, particularly airports, often privatization is seen as the solution. “We have no issue with injecting a private sector mentality into the operation of an airport,” he said.

But “this is the conclusion of three decades of largely disappointing experiences with airport privatization. The primary focus of airports should be to support local and national prosperity, to be an economic catalyst. But in private hands, shareholder returns take top priority. And we struggle with costs at privatized airports as far flung as Paris, Sydney and Santiago,” he said.

“Our message to governments on airport privatization is to be cautious and to consult the industry before making any decisions.

“In India, the government takes more than a third of airport revenue for its own coffers. How can you operate that airport efficiently when you are increasing costs by a third? We have had an extensive look at this. It happened in Australia and in Europe. Now it is happening in South America and across Asia. And in Europe and South America we have been enormously disappointed.”

Governments across Asia should take responsibility for building airports so airlines receive value, he said. “They can use public and private money. There is public money to be put into big hubs. It is critical. But the government cannot give airports away. It’s a big mistake, even in terms of economics,” he said.