Challenges to Airport Privatization-Way Forward

Topics: Airport, Economic growth, Radar Pages: 22 (8356 words) Published: February 20, 2011

Airport is an essential component of an ever expanding air transport industry and airport has a niche in the market place. It is expected to satisfy all the legitimate needs and wants of its clients efficiently. Airports are in competition with other modes and are required to promote their services, they have many business partners, have financial viability, marketing potential and they stimulate economic growth. Therefore, there should be no doubt about the nature of airport services. Airport is truly a business entity and it has to be managed on business principles. As per ICAO, when establishing the internal organisation structure of an airport, the key aim should be to create a structure that enables the airport to meet its objectives and carry out its functions in a most cost-efficient and cost-effective manner while maintaining a high standard of service. This objective makes it imperative that the airport be run as business and it therefore means, improving its profitability while providing users with a high level of service.

If you look around, you will observe that airport environments are changing at a rapid pace. Once viewed as critical public utilities, airports are rapidly evolving into prominent commercial enterprises. They face numerous challenges from a wide variety of sources including reduced government funding, environmental lobbying, complete or partial privatisation and emergence of new Information Communication Technology (ICT). Some of the general factors that have a direct bearing on the airport management are; society is increasingly becoming information based and ICT is in full swing, air traffic growth is causing congestion and development of airports to meet the growing demand has virtually become a top priority. There is a global shift from centralization to decentralization of power and a shift from reliance on institutional help to more self-reliance, and a move from representative democracy to more participative democracy both in politics and at work place. These factors have created significant impacts on airports such as, higher service expectations, financial constraints and community-relations issues. Of course, these changing faces in turn also create new opportunities for airports. This objective makes it imperative that airports be run as business and it means improving its profitability while providing users with a high level of service.Airport business dimension is therefore required to be focused ‘outward’ towards customers, markets, products and services that satisfy customer’s needs and wants. The airport organisation structure will have to meet this ‘outward’ focused dimension. It means that airports should be able to adapt to the changing environment; it will have to be responsive and pro-active; focused on innovation and research oriented; focused on new technology; and totally quality oriented transparent management autonomy.


Airport Impact on the Community
Aviation/Air Transport infrastructure of a nation includes airports, aircraft (airlines), aerospace industry, and air traffic control /air navigation services. Infrastructure services are the essential ingredients to the activities that promote economic growth. As per the World Development Report (WDR-1994), infrastructure capacity grows in concert with economic output in that one percent increase in the stock of infrastructure is associated with one percent increase in GDP across the country. As national income rises, infrastructure too gets developed to support the changing pattern of demand. Airports, airlines and air traffic control /air navigation services are mutually depended on each other. The Air Transport Action Group (ATAG) which is a coalition of organizations from throughout the air transport industry supports the claim with their statistical data that the air transport industry plays a major role in world economics activity....
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