Privatization, corporatization, ownership forms and their effects on the performance of the world's major airports

Tae H. Oum, Nicole Adler, Chunyan Yu

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

This paper investigates the effects of ownership forms and management structure on the performance of airports around the world. Specifically, we focus on measuring and comparing productive efficiency and profitability among airports owned and operated by government departments, 100% government-owned corporations, independent airport authorities, mixed enterprises with government majority ownership and mixed enterprises with private majority ownership. The key results of our analysis based on an extensive cross-sectional, time-series dataset (2001-2003) for the major Asia-Pacific, European and North American airports are: (1) there is strong evidence that airports with government majority ownership and those owned by multi-level of government are significantly less efficient than airports with a private majority ownership; (2) there is no statistically significant evidence to suggest that airports owned and operated by U.S. government branches, independent airport authorities in North America., or airports elsewhere operated by 100% government corporations have lower operating efficiency than airports with a private majority ownership; (3) airports with a private majority ownership achieve significantly higher operating profit margins than other airports; whereas airports with government majority ownership or multi-level government ownership have the lowest operating profit margin; (4) on average, airports with a private majority ownership derive a much higher proportion (56%) of their total revenue from non-aviation services than any other category of airports while offering significantly lower aeronautical charges than airports in other ownership categories excluding U.S. airports. Our results suggest that private-public-partnership with minority private sector participation and multi-level governments' ownership should be avoided, supporting the majority private sector ownership and operation of airports.

Original languageAmerican English
Title of host publication47th Annual Transportation Research Forum 2006
Pages669-695
Number of pages27
StatePublished - 2006
Event47th Annual Transportation Research Forum 2006 - New York, NY, United States
Duration: 23 Mar 200625 Mar 2006

Publication series

Name47th Annual Transportation Research Forum 2006
Volume1

Conference

Conference47th Annual Transportation Research Forum 2006
Country/TerritoryUnited States
CityNew York, NY
Period23/03/0625/03/06

Bibliographical note

Funding Information:
Financial supports via the Social Science and Humanities Research Council of Canada (SSHRC) Research Grant, and University of British Columbia's Humanities and Social Science Seed Research Grant are gratefully acknowledged.

Keywords

  • Airports
  • Efficiency
  • Ownership forms
  • Privatization
  • Profitability

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