JMV
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Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 5:05 am

The thread about delays at ORD prompts me to dust off a subject that friends and I have debated over and over again.

Would the flying public be better served if airports (not ATC) were privately owned and operated? What about an airline going out and buying or building an airport for its own use?

Would a free market approach to utilization of an airport that is privately operated eventually work out the over-scheduling and delays that we encounter today? Would the owners make sure that arrivals and departures were balanced throughout the day so delays were minimal in an effort to market on-time performance?

Or is ownership and management immaterial. Is it a matter of needing more airports in or around major markets like ORD, ATL, LAX, etc. versus expansion of existing airports?
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scottysair
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 5:47 am

I am not sure about soemthing with Airports and it is government control for their airports.
 
air2gxs
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 7:10 am

Correct me if I'm wrong, but I believe most of the airports here in the US are owned by quasi-private entities. JFK/EWR/LGA are all owned by the Port Authority of NY/NJ. SDF by the Regional Airport Authority. Those are the ones I know. Granted the PA of NY/NJ is as close to govt as you can get, but the US government does not own these airports. The owners and operators of the airport work very closely with local governments but are not owned by them.

I guess a better way of asking your question is:

Would the public be better served if the airports were owned by the airlines or a corporation versus these quasi-governmental agencies?

The scheduling delays have nothing to do with airport management per-se, they have to do with peak travel times. LAX will always be busyt when its busy now and slack when its slack. The way to minimize the impact of peak time scheduling is to add capacity. Not an easy thing to do now days.
 
DfwRevolution
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 7:17 am

The airport property (terminals, runways, taxiways, ect.) are usually privately owned. The goverment via the FAA oversees much of what goes on inside airport property, much like nuclear power stations. My power comes from a nuclear powerplant owned by TXU (a publically traded company) but to flush the toliet at that place you need Department of Energy permission. I think its the same for airports.
 
whitehatter
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 7:22 am

British airports are either BAA, privately owned or owned by local authorities. The locally owned ones are set up so as to be companies in their own right but the shares are held by councils and other bodies.

Direct State management is usually disastrous. Having the airports able to trade as companies frees them from many restrictions, and companies such as MAPLC (the Manchester Airports Group) is an example of how it can work well for all concerned.

BAA is a licence to print money and manages airports globally now. That was once state owned. All are overseen by the CAA but are financially independent of the State.
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Tom in NO
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 7:42 am

A few rambling thoughts here:

Most US airports are owned and operated by a governmental agency, usually a city, county, or state.

Some are owned by a governmental agency, and the operation of which is contracted out to a private firm, IND comes to mind (managed by BAA).

Some are owned by the governmental agency, and run by an airport authority (created by but separate from the agency), ICT, MCO, PANYNJ are examples.

In all cases, airports have to follow FAA guidelines for operation, maintenance, capital projects, etc on the airport.

Privatizing airports is something that more and more airports have explored over the past 10 or 15 years. The thing to remember is that even though different types of organizations may own and operate different types of airports, those airports are still part of a bigger plan, a plan that is still beholding to the US government.

I'm not sure that opening up airport ownership and operation (or creating a 'fre market approach') would necessarily help solve airspace/congestion/capacity problems at airports. After all, we deregulated the airline industry, and look at some of the messes we have today (not that dereging the airlines was a bad thing, because it wasn't).

The primary benefit to privatizing airports (for the buyer) would be to create additional sources of revenue, primarily for capital improvements. The primary reason more airports are not privatized is that the agency that owns them does not want to sell what is to them a primary money-maker for the agency. ie, the City of New Orleans, which owns and operates MSY, has a grand total of 2 departments throughout city government which usually show a profit, the Sewer and Water Department, and the airport. Think they'll give up one of those 2?

Tom at MSY
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JMV
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 11:36 am

Tom in NO,

Indeed, many municipalities and county governments maintain ownership of airports because they are money makers. However, governments and its agencies are not created to run as a business and make a profit. They are created to provide essential services that can't be provided by the private sector, and should operate at the lowest cost possible.

It drives me nuts when I hear candidates or politicians talk about running government like a business. Bunk! Government should run as lean as possible, probably more like a non-profit organization than a for-profit business. But I digress...

DfwRevolution,

I would love to hear more about airports that are privately owned, be it the terminals, runways and taxiways. I know that ATL is not, nor is DTW. Both are owned and operated by airport authorities - aka city or county government agencies. As others have mentioned, many others, such as the New York and Boston airports, are owned and operated by port authorities.

Alas, considering it takes a government agencies decades to go through all the red tape (much of which they created themselves) and environmental impact studies, followed by the multitude of dilatory lawsuits just to add a runway, no group of private investors in their right minds would sink a ton of capital into building a private airport.
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saxman66
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 1:45 pm

I believe DCA is the only federaly owned airport. MSP is a good example of an airport owned by the State of Minnesota. Then you have your large airports owned by an authority or a board. Alot of your midsize airports are owned by the city or municipality.

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zippyjet
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 2:27 pm

BWI Is owned and operated by the State of Maryland. Which means, many things operate by the business or lack of model of big government. Meaning many times Sears does not know what Roebuck is doing. There are pros and cons to both sides of this issue. However, I do believe that at times there must be a more efficient way to run BWI. Remember, an airport is a 7 day a week, sometimes 24 hour a day entity whereas many government agencies are Monday through Friday 8:30 to 5:00 pm. With multiple holidays off and generally more liberal leave policy's as compared to the private sector. There are times, one has to call many different numbers to get a light bulb replaced, air conditioning operating and especially to get certain housekeeping chores done. I believe that back in the late 90's there was an airport director here at BWI who tried to run the airport like a business in a competitive market. Supposedly he tried cutting out the fat and frivolous bureaucratic flow problems. However, he resigned or was forced to resign because he did not tow the line and follow the status quo. Many times we (airline employees) feel that common sense sometimes is diverted away from this growing airport. That's too much like right!
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cloudy
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 3:09 pm

This is a more complicated question than it sounds because airports are a natural monopoly. There is competition between airports in a few places, but most of the time if you want to fly to a certain market you have to use a certain airport. In natural monopolies, a private entity can be almost as bad as a government and get away with it - especially if there is heavy government influence. It is hard to get true private sector efficiency in natural monopoly industries, whether they are government owned or not. Anyone who deals with cable companies knows this. Now that they are finally getting some true competition, so they are shaping up a bit.

What airports need is congestion pricing. It ought to cost a lot more to land at Ohare in the middle of the day than at Denver International in the middle of the night. Where there is more demand and less supply, prices ought to go up. We need a system that assures this. But that is not always the case with our warped system. Oftentimes, the least congested airports have fewer flights to spread costs arround to and have HIGHER fees. If we had congestion pricing, there would be more money available at places like Ohare, to build more capacity - and there would be increased incentives to use underutilized airports and less popular flight times.
 
AirframeAS
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 3:40 pm

SEA is controlled by the Port of Seattle which is a private contractor or company. The Port of Seattle has their own police department and has no affiliation with the Seattle Police department, King County Police and Washington State Patrol. The Port of Seattle controls the airport and seaport. BFI is not a part of the Port.

PHX is controlled by the city of Phoenix. The city of Phoenix uses the Phoenix Police Department to patrol the airport.

The some airports in the U.S. are controlled privately but also some are controlled by their respective city, county or state. Ive never heard of an airport here in the U.S. controlled by the federal government. This excludes the F.A.A. and the TSA doesnt control squat except for their silly lil 'human scanner' x-ray machines at the security checkpoints. (Sorry, just had to add a lil humor after that dumb TSA agent scanned himself.... Smile)
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JMV
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RE: Airports - Privatize Or Gov't Controlled

Sat Jul 17, 2004 11:31 pm

Cloudy,

You raise a valid point in that in smaller markets that support only a single airport, a privately run airport might cause problems.

AirframeAS,

In reading about the Port of Seattle http://www.portseattle.org/about/, I get a sense it is hybrid between private and government control, or as they put it, a municipal corporation. That is an interesting concept. Although, if they have their own police force, I would tilt the scales towards the Port of Seattle being a government entity. As best as I understand it, only a governmental body has the ability to arrest someone.

Then again, considering Cloudy's observations, the Seattle model may be the best possible option in some markets.
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frugalqxnwa
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RE: Airports - Privatize Or Gov't Controlled

Sun Jul 18, 2004 12:13 am

This goes against my anti-big-government sentiments, but here goes. Airports are part of the aviation infrastructure that enables aircraft to operate safely, same as the interstate freeways in the US are part of an infrastructure that enables cars to be operated safely. Most public infrastructures are not money-makers in the hands of private enterprise, and airports generally speaking are no exception, BOI is the only airport I can think of that has turned a profit (back in the tech-boom '90s, not sure about now, especially since they are due to open phase II of the new terminal late this year). Therefore, airports should continue to be owned and overseen by government agencies.
 
AirframeAS
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RE: Airports - Privatize Or Gov't Controlled

Sun Jul 18, 2004 3:34 pm

I would tilt the scales towards the Port of Seattle being a government entity. As best as I understand it, only a governmental body has the ability to arrest someone.

When the Port of Seattle police arrest someone, they dont take the arrestee to jail. They hold them and then call the Washington State Patrol to file a complaint and turn over the arrestee to WSP to take to the King County Jail in Seattle. The Port of Seattle police only has authority on the airport property, but has its own police force.

The way SEA is controlled is hard to explain. As far as I know when I worked with AS, my class was told that the Port of Seattle is not government controlled, but privately controlled. Thats all I know about it and I also dont know any specifics.
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F9Fan
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RE: Airports - Privatize Or Gov't Controlled

Sun Jul 18, 2004 4:13 pm

DEN is operated by the City and County of Denver. The director of the airport is appointed directly by the mayor and serves at his pleasure. The airlines lease space at the airport from the city, and the concessionaires also operate on leases granted by the city. The Denver Police Department provides security to the airport outside what the TSA provides, the Denver Fire Department employs all the fire response at the airport, and even the people at the information desk are employed by the City of Denver. In theory, the residents of the City and County of Denver are responsible for paying for airport operations, but landing fees, lease payments, and other direct airport revenues are more than sufficient to cover the costs of airport operations.

That said, DEN is very unusual. In the United States, most airports are run by a quasi-governmental board such as the PANYNJ.

F9Fan
 
spacecadet
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RE: Airports - Privatize Or Gov't Controlled

Sun Jul 18, 2004 4:21 pm

Just to clear something up - the Port Authority of NY and NJ is not a "quasi-private entity". It is a government agency that was created to oversee the ports in and around NYC (airports, seaports, bus and train terminals). It also oversees the building of bridges and other public works.

The whole issue of "authorities" has been a thorn of contention in NYC for many years (ever since they were first used and abused by Robert Moses) since there's little direct public say in what these agencies do, and their officials are not elected or answerable to the public. But they're not "semi-private" at all; their money originally came from tax dollars (though the PA is now self-supporting), their executives appointed by city and state government officials who are elected.

EWR, JFK and LGA are owned by the government. The Port Authority is part of the government.

[Edited 2004-07-18 09:23:56]
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