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IATA urges caution on Airport Privatisation; emphasises on consumers and stakeholders’ benefits

IATA DGIn its recently concluded 74th Annual General Meeting (AGM) in Sydney, Australia the International Air Transport Association (IATA) urged governments to take a cautious approach when considering airport privatisation. In a unanimously passed resolution, IATA members called on governments to prioritise the long-term economic and social benefits delivered by an effective airport ahead of the short-term financial gains provided by a poorly thought-out privatization.

“We are in an infrastructure crisis. Cash-strapped governments are looking to the private sector to help develop much needed airport capacity. But it is wrong to assume that the private sector has all the answers. Airlines have not yet experienced an airport privatisation that has fully lived up to its promised benefits over the long term. Airports are critical infrastructure. It is important that governments take a long-term view focusing on solutions that will deliver the best economic and social benefits. Selling airport assets for a short-term cash injection to the treasury is a mistake,” said Mr Alexandre de Juniac, IATA’s Director General and CEO.

Currently about 14 per cent of airports globally have some level of privatisation. As they tend to be large hubs, they handle about 40 per cent of global traffic.

IATA unequivocally stated that there were no visible benefits to the end consumers as well as industry stakeholders from airport privatisation across the globe.  “IATA research shows that private sector airports are more expensive. But we could not see any gains in efficiency or levels of investment. This runs counter to the experience of airline privatisation where enhanced competition resulted in lower pricing to consumers. So we don’t accept that airport privatisation must lead to higher costs. Airports have significant market power. Effective regulation is critical to avoiding its abuse—particularly when run for profit by private sector interests,” said Mr Alexandre who also noted that five of the top six passenger ranked airports by Skytrax are in public hands.

IATA Recommendations on Airport Privatization:

  • Focus on the long-term economic and social benefits of an effective airport
  • Learn from airlines’ positive experiences with corporatisation, new financing models, and alternative ways of tapping private sector participation
  • Make informed decisions on ownership and operating models to best protect consumer interests
  • Lock-in the benefits of competitive airport infrastructure with rigorous regulation

According to IATA DG, there is no one-size-fits-all solution. A broad range of ownership operating models exist that can meet a government’s strategic objectives without a transfer of control or ownership to the private sector. Globally, many of the most successful airports are operated as corporatised entities of governments. “Governments need to evaluate the pros and cons of different models taking into account interests of all stakeholders, including airlines and customers. The most important thing is that airports meet the needs of customers and airport infrastructure users, at a fair price. And to do that, user consultation must be an integral part of the consideration process,” added Mr Alexandre.

Akbar Al Baker New IATA Board Chairman

QatarCEO_akbaralbakerThe International Air Transport Association (IATA) announced that Qatar Airways Group Chief Executive, Mr Akbar Al Baker, has assumed his duties as Chairman of the IATA Board of Governors (BoG) for a one-year term effective from the conclusion of the 74th IATA Annual General Meeting in Sydney, Australia. Al Baker is the 77th chair of the IATA BoG and the first CEO from Qatar Airways to hold the position. He has served on the BoG since 2012. He succeeds Goh Choon Phong, CEO of Singapore Airlines.

Mr Al-Baker was named Qatar Airways’ Group Chief Executive in 1997. In this position, Al Baker has spearheaded the growth of Qatar Airways from a small regional carrier into a major global. He was president of the 70th AGM which was held in Doha in 2014.

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