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Airport privatization with public finances under stress: An analysis of government and investor's motivations

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  • Cruz, Carlos Oliveira
  • Sarmento, Joaquim Miranda

Abstract

The management model of airports has long stood as a central research area in the transport sector. There are a wide range of studies that focus on the potential benefits and pitfalls of private airport management. The results of these efficiency studies have not provided irrefutable evidence for the superiority of private management over public management, but the momentum towards privatizing airports is growing. The reason for privatization has been more related with privatization revenues for governments, rather than more efficient management. The search for maximizing the sale value can have negative impacts from a welfare perspective, for example, through excessive increases in tariffs for passengers. This research reflects on the motivations for governments to privatize, and is illustrated by a case study – Portugal – in which the privatization occurred as a result of three main large drivers: 1) a bailout programme by the IMF, the EU, and the ECB; 2) a revision of the regulatory model, and; 3) the need to increase the capacity of Lisbon's airport system in the medium term.

Suggested Citation

  • Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2017. "Airport privatization with public finances under stress: An analysis of government and investor's motivations," Journal of Air Transport Management, Elsevier, vol. 62(C), pages 197-203.
    • Handle: RePEc:eee:jaitra:v:62:y:2017:i:c:p:197-203
    DOI: 10.1016/j.jairtraman.2017.04.007
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    Citations

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    Cited by:

    1. Graham, Prof Anne, 2020. "Airport privatisation: A successful journey?," Journal of Air Transport Management, Elsevier, vol. 89(C).
    2. Xu, Fangzhou & Hanaoka, Shinya & Onishi, Masamitsu, 2019. "Multi-airport privatization in a Japanese region with trip-chain formation," Journal of Air Transport Management, Elsevier, vol. 80(C), pages 1-1.
    3. Álvaro Costa & Carlos Oliveira Cruz & Joaquim Miranda Sarmento & Vitor Faria Sousa, 2021. "Empirical Analysis of the Effects of Ownership Model (Public vs. Private) on the Efficiency of Urban Rail Firms," Sustainability, MDPI, vol. 13(23), pages 1-14, December.
    4. Brito, Igor R.S. & Oliveira, Alessandro V.M. & Dresner, Martin E., 2021. "An econometric study of the effects of airport privatization on airfares in Brazil," Transport Policy, Elsevier, vol. 114(C), pages 338-349.
    5. Bringmann, Katja & De Langhe, Katrien & Kupfer, Franziska & Sys, Christa & Van de Voorde, Eddy & Vanelslander, Thierry, 2018. "Cooperation between airports: A focus on the financial intertwinement of European airport operators," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 59-71.
    6. Catalão, Francisco Pinheiro & Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2019. "The determinants of cost deviations and overruns in transport projects, an endogenous models approach," Transport Policy, Elsevier, vol. 74(C), pages 224-238.
    7. Littlechild, Stephen, 2018. "Economic regulation of privatised airports: Some lessons from UK experience," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 100-114.

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