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ACI World director general, Angela Gittens, reflects on trends in airport ownership.

As we have long told the world, airports no longer operate as a homogeneous group of public utilities as there are now a variety of ownership structures ranging from government-owned and operated to partially or fully privatised.

Airports compete to gain air service for their regions and, for some, to be the gateways to cities, regions and even entire continents.

The ACI inventory of privatised airports in 2016 revealed that 614 commercial service airports had private sector participation. Europe continues to be the region with the highest number of privatised airports at 266, followed by Asia-Pacific with 162 and Latin America-Caribbean with 153 privatised airports.

The prevailing motive for airport privatisations or Private Public Partnerships (PPPs) is to bring capital investment to an economic engine that States are not able or willing to finance from the public purse. States also seek to bring commercially-driven management and the flexibility to adapt to a dynamic environment for which governmental processes are not usually well suited.

Of course privatisation is a broad term with many meanings in a variety of circumstances. For the purpose of the ACI Inventory, we have defined privatisation as, “participation of the private sector in the management, financing and/or ownership of airport infrastructure.”

This may include freeholds; listed companies; concessions or leases; management contracts; and government-owned, but commercially operated companies. The most common model for privatisation is concessions and lease contracts (41%), followed by freeholds (24%), listed airports (23%), and management contracts (8%).

Government-owned operators or airports that are exclusively managed by public authorities continue to make up the majority of airports across the globe. Indeed, of the estimated 4,300 airports with scheduled traffic, 86% are public, in that they are owned and operated by a government.

However, if we narrow the sample to the world’s 100 busiest airports for passenger throughput, almost half have private sector participation.

Private investment flows to airports with high throughput or potential for high throughput. Market size matters for private investment. Taking into account both fully privatised airports and those operated under PPPs, as much as 41% of global airport traffic is held by airports that are managed and/or financed by private stakeholders.

As shown, there are regional differences in ownership models and financing of airports.

While there may be a number of long-standing institutional reasons for this, existing financing schemes may have shaped this arrangement.

For instance, local governments that own and operate North American airports can make wide use of debt instruments through a well-established municipal bond market that offers a tax advantage for individual and institutional purchasers. Since this remains a major source of financing, private equity has played only a small role in terms of overall airport finance for the region to this day.

As well, this region has successfully implemented a ‘corporatisation’ model where the airport asset remains in government or a not-for-profit’s hands but operates on a commercial or quasi-commercial basis.

ACI does not prescribe any specific type of ownership model, but advocates that airports should be permitted to operate under a range of ownership models.

Types of ownership and participation of private capital vary from airport to airport depending on local circumstance, but each model should guarantee flexibility to airport operators in developing their businesses to achieve a reasonable return on investment.

ACI has developed a Policy Brief on Airport ownership, economic regulation and financial performance, which is accessible at www.aci.aero/Publications.

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