Airports provide access to and interlink regional, national and international markets. Investment in airport infrastructure is essential to economic development, job creation, attracting foreign investment and creating new commercial opportunities for the local economy. Traditionally, airports were owned, managed and operated by the public sector but there has been a worldwide trend towards private sector involvement with varying degrees of private ownership and management, including the use of PPP models.
Starting in the mid-nineties, a wave of ownership and management reform of airports took place in many countries around the world. Following a number of landmark cases, like the privatization of the British Airports Authority, and influenced by the spread of PPP models in the development of seaport terminals, governments began to recognize the potential benefits of private sector participation in airport operations and management. Private sector involvement represented an effective way of updating infrastructure and improving services without expending fiscal resources. At the same time, airports were no longer seen as public utilities but as commercial enterprises, presenting new opportunities for funding development.
When done right, private investment in airports can root out inefficiency and introduce customer oriented management styles. State owned enterprises are notorious for being overstaffed with overprotected workers. Engaging a private partner can create a focus on service and commercial performance by holding the firm accountable for its contribution to service improvements, rewarding it for controlling costs (by providing services with fewer staff, for example), and introducing a businesslike approach to billing and collection.