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

Tae H. Oum*, Nicole Adler, Chunyan Yu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

202 Scopus citations

Abstract

This paper focuses 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 analysis is based on a cross-sectional, time-series dataset (2001-2003) for the major Asia-Pacific, European and North American airports. 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; there is no statistically significant evidence to suggest that airports owned and operated by US 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; 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; and generally, airports with a private majority ownership derive a much higher proportion 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 US airports. The 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
Pages (from-to)109-121
Number of pages13
JournalJournal of Air Transport Management
Volume12
Issue number3
DOIs
StatePublished - May 2006

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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