Airports are key enhancers of commerce and trade; they generate massive transportation and key economic benefits (Vasigh, 2007). Privatization of airports relates to transfer of ownership of airport from public ownership sector to private ownership (Jobs Consultancy, 2007). Privatization process aims at increasing of efficiency, competitiveness and viable financing of airports. Considerations on whether to privatize an airport are made by governments and the decision has a long-term impact that follows (Jobs Consultancy, 2007). A complete and thorough review of the decision is made for a government to come up with a decision whether to privatize an airport or not. The complete review is necessary to ensure the decision is viable financially speaking and to avoid making a mistake that may be chaotic in the long run.
Privatization could be full privatization or just partial privatization. Financial implications of the idea of privatization must be thoroughly revised so that a clarified and transparent decision would be made. Ownership of airports takes place in many different forms. It could be through management articulating new investment programs such as selling of assets; management contracts; and private and public partnership agreements. Objectives of airport privatization includes modernization of both land and air-side facilities of the airline, minimize public or rather government interruption in airport management and operations, facilitate utilization of private capital and funding, building and financing airports, and or finally improving of service quality and efficiency (Vasigh, 2007).
Traditionally, airports have been managed, operated and owned by the government entities. United Kingdom started privatizing its ai...
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...n there long enough in the United Kingdom and hence most airports in UK are privately owned such that they generate a lot of profits due to passenger traffic despite the high government charges in airline fees.
In Conclusion privatizing of airports is generally meant to facilitate private financing for airport development, increase efficiency and upgrade its facilities. This has largely contributed, to fully or partial privatization of airports. Airports sought to expand and diversify their financial sources of funding for development purposes.
List of References
Adam Smith Institute, (2002). Plane Commonsense.
Retrieved from: http://adamsmith.org/80ideas/idea/70.htm
Job Consultancy, (2007). New Interest in US airport Privatization.
Retrieved from: http://www.leighfisher.com
Vasigh, (2007). Airport Privatization. Retrieved from: http://www.airports.org
whether or not that city had enough gates for the new carrier, and whether the
Recently Qantas has partnered up with Emirates in an effort to channel Europe-bound travellers through Dubai International Airport in a mutually beneficial arrangement, an example of business-to-business geographic segmentation marketing.... ... middle of paper ... ... Indirect Taxes on International Aviation*.
In 1978, deregulation removed government control over fares and domestic routes. A slew of new entrants entered the market, but within 10 years, all but one airline (America West), had failed and ceased to exist. With long-term growth estimates of 4 percent for air travel, it's attractive for new firms to service the demand. It was as simple as having enough capital to lease a plane and passengers willing to pay for a seat on the plane. In recent news, the story about an 18-yr British...
On October 24, 1978, President Carter signed into law the Airline Deregulation Act. The purpose of the law was to effectively get the federal government out of the airline business. By allowing the airlines to compete for their customers' travel dollars, was the thinking, that fares would drop and an increased number of routes would spring up.
In lights of the PESTLE model, the political factors bring both opportunities and threats to Jetstar’s new proposal. Since this proposal focus on the Australia-India low price airline market, the analysis conducts involving Australia and India political environments. There are two potential opportunities in this political environment. Firstly, the Australian government has the incentive to boost the development of tourism between the two countries (Tourism Australia 2012). With the support of government, the start of the new route could be easier. For example, American government erects legislation to increase competition of the airport ‘by forcing these airports to increase the availability of scarce facilities’ (Williams 2015). Such legislations and regulations as well as financing investment or subsidies from government could directly help the airline company cut the cost. Similarly, Australian government could also have powerful intervention to influence aviation market. Thus, it is a big opportunity for Jetstar to the new route expansion if it acquires the
Before we discuss government intervention and its affect on an industry’s competition we must first seek to understand the five forces framework. The theory, discussed in 1979 by Micheal Porter seeks to evaluate the attractiveness of an industry. Throughout this essay I will explore the theory and then relate government action and its well-documented affects on the airline industry.
Airborne should strengthen and continually improve its services domestically, since it gives larger revenues, then strengthen its alliances internationally, so as to serve the demands of the international market. To add on its profitability, Airborne should lease out a portion of the airport facilities to other airlines, so that it could have other source of income to compensate the maintenance costs of the airport.
In the Travel Pulse article "Airlines Leaving Us Little Choice – Like A Monopoly," posted by Rich Thomaselli, the practice of monopolization is observed in the airline industry. The author criticizes large airlines on their growth that has led to at “93 of the top 100 [airports], one or two airlines controlling a majority of the seats” (Thomaselli). The scornful article was written after recent events that have caused the Department of Justice and five States to sue two of the biggest U.S.
Shortly after World War I, the U.S. Government discovered the abilities of the modern airplane and created the idea of utilizing aircraft to transport mail across the country. In 1917, Congress approved funding to experiment with the idea of delivering mail by air. By 1920, the Post Office was delivering mail across the entire country, eliminating over 22 hours in delivery times of a coast-to-coast route. With the success of the airmail service and the growing popularity of civil aviation, the U.S. Government recognized the need to develop set standards for civil aviation and in 1926 created the Air Commerce Act of 1926. The Air Commerce Act of 1926 called for the government to regulate air routes, navigation systems, pilot and aircraft licensing and investigation of accidents. The act also controlled how airlines were compensated for mail delivery. Later in 1930, Postmaster General Walter Brown made recommendations which were later known as the Watres Act which consolidated airmail routes and opened the door for longer-term contracts with the airlines. Brown handled the situation regarding new contracts poorly by only inviting a hand selected list of large airlines to the negotiation table. This move pushed smaller airlines to complain and the issue was pushed to Congress. Following congressional hearings President Roosevelt later decided Brown’s scandal was too much to deal with and canceled all mail contracts completely and handed over air mail delivery responsibility to the U.S. Army. That decision was a disaster, and one month later, air mail was handed back over to the private sector. This time, however contract bidding was more structured and fair to all. It was then clear that the airline industry was back in full swing...
These costs are distributed to each airline as they use this resource to transport passengers. As new politicians are elected to Congress and new administrators take charge of the FAA, new regulations regarding this industry. These regulations affect everything from mergers to the airspace that the airlines operate in, as well as what hubs and airports each airline operates out of. These factors are not issues that the industry faces, the TSA, the Transportation Security Administration, creates an unnecessary burden for the passengers attempting to travel from one location to another. The TSA inspections required before a passenger is allowed to board their respective flights allows time for each passenger to become frustrated with the amount of time they have to allot for inspection as well as the invasion of their privacy.
There are several limitations in aviation infrastructure in India for instance parking bays, gates to board passengers, landing slots etc are in short supply. This often leads to massive delays, cancellation and major losses in revenue for many LCCs. For upgraded infrastructure facilities, India’s civil aviation minister Praful Patel said on 15 February 2006 that Indian government defer decision on privatization of International Airport in Delhi and Mumbai. The government aims to set up joint venture to operate these airports and offered 74 per cent stakes. Foreign direct investment (FDI) can hold up to 49 per cent in this transaction, while 25 per cent must be held by private Indian companies. Remaining 26 per cent to be held by Airport Authority of India (AAI) and other government PSUs.
Stakeholders are those groups or individual in society that have a direct interest in the performance and activities of business. The main stakeholders are employees, shareholders, customers, suppliers, financiers and the local community. Stakeholders may not hold any formal authority over the organization, but theorists such as Professor Charles Handy believe that a firm’s best long-term interests are served by paying close attention to the needs of each of these stakeholders. The modern view is that a firm has responsibilities to all its stakeholders i.e. everyone with a legitimate interest in the company. These include shareholders, competitors, government, employees, directors, distributors, customers, sub-contractors, pressure groups and local community. Although a company’s directors owes a legal duty to the shareholders, they also have moral responsibilities to other stakeholder group’s objectives in their entirely. As a firm can’t meet all stakeholders’ objectives in their entirety, they have to compromise. A company should try to serve the needs of these groups or individuals, but whilst some needs are common, other needs conflict. By the development of this second runway, the public and stakeholders are affected in one or other way and it can be positive and negative.
Budd, T. (2014). Airport ground access and private car use: a segmentation analysis.Journal of transport geography, 36, 106-115. doi:10.1016/j.jtrangeo.2014.03.012
Political · The expansion of the European Union (EU)· BAA’s proposed Stanstead expansion· CAA’s new regulations on airport charges
The state owned airlines suffer the maximum from this problem. These airlines have to make several special considerations with respect to selection of routes, free seats to ministers, etc which a privately owned airline need not do. The state owned airlines also suffers from archaic laws applying only to them such as the retirement age of the pursers & hostesses, the labour regulations which make the management less flexible in taking decision due to the presence of a strong union, & the heavy control &interference of the government.