Airport Privatization: False Panacea?

Abstract

This paper describes the recent history of airport privatization, presents the arguments for and against airport privatization, and assesses the prospects for airport privatization in the United States. The traditional role of government in aviation was challenged during the 1970s with passage of the Airline Deregulation Act, which terminated 40 years of federal  economic regulation of commercial airlines. Many economists and policy analysts have argued that airline deregulation did not go far enough, and that the federal government should have also introduced competition into the airport industry. Calls for greater reliance on the private sector in aviation infrastructure development gained momentum in the 1980s that has continued into the 1990s. The authors conclude that, given the complex goals that public administrators must balance, coupled with the risks involved in total privatization, the prudent course of action is to seek less extreme solutions for the problems facing airports today. In this regard, privatization models that have combined elements of the market approach with a public administration approach would seem to represent the models worth replicating.