Description
history of privatization, objective of airport privatization, pros and cons of airport privatization, policy issues and Privatization Strategies.
? A Brief History of Privatization ? Objectives of Airport Privatization ? Airport Privatization
? ?
Initial attempt Privatizations: Pros and Cons
? Policy Issues
?
Regulatory Framework
? Privatization Strategies
? Conclusion
A BRIEF HISTORY OF PRIVATIZATION
? Started in 1980 in USA ? Introduced in INDIA in 1996
Reasons for privatization of Airport
Objectives of airport privatization
? Improve efficiency and service
? Complete the projects on fast track ? Utilize private funding to design , build
and finance the airport facilities ? Minimize government involvement in operations and maintenance ? Minimize public sector funding ? Modernize air and land-side facility
AIRPORTS
? Are gateways of trade and commerce
? Generate significant economic and
transportation benefits ? Are catalysts for economic growth and improve the quality of life for travelers ? Indian airports handle 42 million passenger annually ? Delhi , Mumbai , Chennai , Kolkata contributes two-third of passenger and
AIRPORT PRIVATIZATION
? The UK government conducted a public
share offering of the former BAA , valuing the company at $2.5 billion(1987). ? BAA owned and operated 3 main London airports and 4 main Scottish airports. ? Hyderabad , Mumbai , Delhi , Bangalore airports are progressing in privatization ? CIAL only private airport in India
PRIVATIZATION: PROS AND CONS
? Cost savings: greater efficiency of
operations. ? Capital infusion: open up non traditional sources of capital. ? Convert private airport into a tax-paying corporate entity. ? Help increase the capacity of the airport system. ? Liberate resources for other government expenditures.
Arguments against privatization
? Would cause private monopolies.
? Cross subsidization. ? Higher aeronautical charges.
? Cutback on unprofitable programs.
? Without right incentives , private investor
may not be as efficient and productive , adequate investment may not happen.
Policy Issues and Concerns
?
The effect on airlines
? Airports could raise their fees because they face only
limited competition.. ? Airline charges could be capped at historical rates plus an inflation factor.
? The effect on local governments
?
?
Governments would benefit from adding airports to their local tax bases. Governments could retain all privatization
? The effect on passengers
?
Airlines may pass on the cost increases to passengers.
? The effect on the federal budget
?
Access to tax-exempt debt represents significant cost savings for public airports.
Privatization Strategies
?
? ?
?
?
Full privatization Strategic partnerships Long-term lease agreement Build-own-operated (BOO) Build-own-operate-transfer (BOOT)
Examples: Major privatizations in Latin America
? Argentina ? Colombia-
Barranquilla Cartagena ? Bolivia: three airports ? Dominican Republic: four airports ? Mexico (Southeast and Pacific Groups) ? Uruguay Punta Del Este ? Costa Rica, San Jose, ? Chile, Santiago
Fraport
? The parent company of Germany’s Frankfurt
Airport, ? Fraport was privatized in 2001 though state and municipal governments still hold stakes. ? Fraport owns major portions of Hahn and Hanover airports in Germany, Lima airport in Peru, New Delhi airport in India, and one of the Mexican regional airport groups.
AENA
? AENA Although still government-owned, AENA
operates commercially. It owns 47 airports in Spain and has ownership stakes and/or management contracts for 29 others in seven countries including several major airports in Colombia and a stake in one of four regional Mexican airport.
? $2.9 billion revenue in 2005:
2007 YVR Airport Services Ltd.
? Formed in 1994
? 18 airports in 7 countries ? 27 million passengers ? Over 720,000 aircraft movements ? Serving over 160 airlines ? US$400 million revenues under
management ? US$1.2 billion assets under management
Conclusion
? Private sector participation preferred and possible
? Private airports may have direct access to capital
markets ? Government should clarify policy and regulatory environment ? Not all airports are financially viable for privatization.
Thank You for Your Attention
doc_239196558.pptx
history of privatization, objective of airport privatization, pros and cons of airport privatization, policy issues and Privatization Strategies.
? A Brief History of Privatization ? Objectives of Airport Privatization ? Airport Privatization
? ?
Initial attempt Privatizations: Pros and Cons
? Policy Issues
?
Regulatory Framework
? Privatization Strategies
? Conclusion
A BRIEF HISTORY OF PRIVATIZATION
? Started in 1980 in USA ? Introduced in INDIA in 1996
Reasons for privatization of Airport
Objectives of airport privatization
? Improve efficiency and service
? Complete the projects on fast track ? Utilize private funding to design , build
and finance the airport facilities ? Minimize government involvement in operations and maintenance ? Minimize public sector funding ? Modernize air and land-side facility
AIRPORTS
? Are gateways of trade and commerce
? Generate significant economic and
transportation benefits ? Are catalysts for economic growth and improve the quality of life for travelers ? Indian airports handle 42 million passenger annually ? Delhi , Mumbai , Chennai , Kolkata contributes two-third of passenger and
AIRPORT PRIVATIZATION
? The UK government conducted a public
share offering of the former BAA , valuing the company at $2.5 billion(1987). ? BAA owned and operated 3 main London airports and 4 main Scottish airports. ? Hyderabad , Mumbai , Delhi , Bangalore airports are progressing in privatization ? CIAL only private airport in India
PRIVATIZATION: PROS AND CONS
? Cost savings: greater efficiency of
operations. ? Capital infusion: open up non traditional sources of capital. ? Convert private airport into a tax-paying corporate entity. ? Help increase the capacity of the airport system. ? Liberate resources for other government expenditures.
Arguments against privatization
? Would cause private monopolies.
? Cross subsidization. ? Higher aeronautical charges.
? Cutback on unprofitable programs.
? Without right incentives , private investor
may not be as efficient and productive , adequate investment may not happen.
Policy Issues and Concerns
?
The effect on airlines
? Airports could raise their fees because they face only
limited competition.. ? Airline charges could be capped at historical rates plus an inflation factor.
? The effect on local governments
?
?
Governments would benefit from adding airports to their local tax bases. Governments could retain all privatization
? The effect on passengers
?
Airlines may pass on the cost increases to passengers.
? The effect on the federal budget
?
Access to tax-exempt debt represents significant cost savings for public airports.
Privatization Strategies
?
? ?
?
?
Full privatization Strategic partnerships Long-term lease agreement Build-own-operated (BOO) Build-own-operate-transfer (BOOT)
Examples: Major privatizations in Latin America
? Argentina ? Colombia-
Barranquilla Cartagena ? Bolivia: three airports ? Dominican Republic: four airports ? Mexico (Southeast and Pacific Groups) ? Uruguay Punta Del Este ? Costa Rica, San Jose, ? Chile, Santiago
Fraport
? The parent company of Germany’s Frankfurt
Airport, ? Fraport was privatized in 2001 though state and municipal governments still hold stakes. ? Fraport owns major portions of Hahn and Hanover airports in Germany, Lima airport in Peru, New Delhi airport in India, and one of the Mexican regional airport groups.
AENA
? AENA Although still government-owned, AENA
operates commercially. It owns 47 airports in Spain and has ownership stakes and/or management contracts for 29 others in seven countries including several major airports in Colombia and a stake in one of four regional Mexican airport.
? $2.9 billion revenue in 2005:
2007 YVR Airport Services Ltd.
? Formed in 1994
? 18 airports in 7 countries ? 27 million passengers ? Over 720,000 aircraft movements ? Serving over 160 airlines ? US$400 million revenues under
management ? US$1.2 billion assets under management
Conclusion
? Private sector participation preferred and possible
? Private airports may have direct access to capital
markets ? Government should clarify policy and regulatory environment ? Not all airports are financially viable for privatization.
Thank You for Your Attention
doc_239196558.pptx