Abstract
Assessing the effects of ownership structure on efficiency has received considerable attention in the aviation management literature. Commercialization has been widely employed both in developing and developed countries as a means of increasing operational efficiency. Since airports and seaports are operationally similar, this paper examines the literature and methods used to assess the effects of privatization in both types of infrastructure. We observe that the impact of privatization on performance depends not only on the degree of privatization but on the competition in the market. Following a 4-level specification commonly employed in the seaport literature that captures degrees of privatization, we estimate a stochastic frontier model for airport efficiency as a function of ownership. We conclude that airport authorities in the United States are equally as efficient as fully privatized airports elsewhere, due to a high degree of competition and fiscal independence from the other governmental entities. Additionally, while privatization may be an effective mechanism of introducing corporatization into infrastructures that are characterized by poor competition and direct government control, the airport authority appears to achieve the benefits of privatization in operation without actual transfer of ownership.
Highlights
Privatization of state owned enterprises (SOE), especially in the field of transportation, has been popular trend in Europe, Asia, Australia, Africa and Latin America
Since over 50% of airports revenues in general are derived from aeronautical sources (ATRS 2009), we conclude that revenue does not reflect the effect of ownership on technical efficiency
The results obtained in this paper indicate that ownership forms are less important than competitiveness and corporatization at the management level
Summary
Privatization of state owned enterprises (SOE), especially in the field of transportation, has been popular trend in Europe, Asia, Australia, Africa and Latin America. The trend was initiated in the United Kingdom by the Thatcher Administration with the Transport Act of 1981. The Act established the framework for privatizing British ports by creating a holding company (Associated British Ports or ABP) for 19 ports and offering 49% of the company for sale to investors (Bassett, 1993.) This set the stage for the privatization of other major SOEs, including airlines, roads, telecommunication, railways and airports. Following in the footsteps of seaport privatization, airport privatization was initiated in Britain by the Thatcher administration with the sale of 7 commercial airports to the public via the British Airport Authority (BAA).
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