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Essay on history of airport
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1.1 Background
Airports can be considered as important national resources of most countries in the world. The main responsibility of an airport is in transportation of people and goods and in internal and global business. They are where the nation’s aviation system connects with other modes of transportation and where state responsibility for managing and regulating air traffic operations intersects with the role of governments that own and operate most airports. However, most major airports are owned and operated by the private sectors. This is due to several reasons such as to improve efficiency and economic performance, be more competitive as well as to maximize the community’s return from the airport assets in which public enterprise found out to be less efficient in term of its production and management.
London Heathrow Airport is one of the major airports owned and operated by privatized company formerly known as British Airport Authority (BAA plc), now Heathrow Airport Holdings. Heathrow Airport Holdings owns and operates four major airports in the UK, including London Heathrow, Aberdeen, Glasgow and Southampton. However, in this case study, London Heathrow would be the writer’s main interest as to look at the effect of its privatization and find the possible impacts that it might have on the economy and society in general.
1.2 Definition of Airport Privatization
According to Airport Corporate Research Program’s Privatization Guidebook, Privatization refers to the shifting of governmental functions, responsibilities, control, and in some cases ownership, in whole or in part, to the private sponsors (ACRP, 2012, p.1). The term airport privatization is often understood to mean the transfer of an entire airport to ...
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...Airport Holdings is considered a good example of a privatized company operating in a regular market. Although there are about 41 airports in the UK handling passengers and cargo, the market is highly regionalized. In particularly, all the airports under the company including London Heathrow have almost a localized monopoly in the economically important south-east of England with only limited competition from other airports around the UK (Parker, 1998).
Works Cited
http://www.heathrowairport.com/about-us/company-news-and-information/company-information/our-history
http://www.leighfisher.com/global-experience/guidebook-considering-and-evaluating-airport-privatization#sthash.sMcjrO6S.dpuf
http://reason.org/news/show/apr-2013-airport-privatization#sthash.sVnRrSOF.dpuf
http://reason.org/search/results
http://www.heathrow-airport-guide.co.uk/history.html
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.
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.
Airports are extremely expensive in every respect imaginable. From the multi-million dollar runways to the multibillion dollar terminals, airports cost significantly more than most people might think; not to mention the hundreds of employees that demand wages. The aviation industry is notorious for being unstable and completely unpredictable. It is common for airlines to fold under extensive economic pressure, but it is essentially unheard of for airports to go bankrupt. A report by Airports Council International says that airports are making more money than ever before. It is known that airlines make money through airfare tickets, but how do airports make money?
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
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.
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...
Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope...
Tom, Y. (2009). The perennial crisis of the airline industry: Deregulation and innovation. (Order No. 3351230, The Claremont Graduate University). ProQuest Dissertations and Theses, , 662-n/a. Retrieved from http://search.proquest.com/docview/304861508?accountid=8364. (304861508).
I have chosen Heathrow Airport for my report because it is one of the most implausible airports in the world. It is used by more than 90 airlines flying with numerous passengers to 170 destinations.
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.
One of the contributions that the government was able to provide is a larger airport with more
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
Knippenberger, U. (2010). Conference report: From airport city to airport region? The 1st International Colloquium on Airports and Spatial Development. Town Planning Review, 81(2), 209-216
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.