Discuss the Benefit of Globalization of Airport Industry

Topics: Shanghai Pudong International Airport, Airline, Cargo Pages: 11 (3556 words) Published: October 8, 2012
This report discusses about the benefit of globalization of airport industry. This report has two part,first one conducts the literature review which introduces the consequences of privatization and internationalization of the airport industry. And also introduces about how the benefit effect on airport companies,airlines and passengers. The second part analyses about how globalization effect on Shanghai Airport Authority which owns 2 airports in Shanghai. It is mainly focused on 2 points,define and analyse globalization effects air freight traffic and introduce the development of airport based city.

2. Introduction
Globalization,in its most literal sense,is the process of making,transformation of things or phenomena into global ones. It can be described abstractly as a process by which the people of the world are unified into a single society and function together. Airports are increasingly becoming global businesses. Some companies own or manage airports in different countries around the world. The privatisation of airports,or the contracting out of airport management to private companies,is acceleratingthe trend. The major players are moving to gain a foothold in more and more markets. The impact of this process of globalisation and concentration is not always positive for workers, for passengers or for the airlines which use these airports. China and India are large exporters and importers. They both have large and growing domestic aviation markets to facilitate their production of goods to sell in the international market,and also have rapidly growing flows of international air traffic. Certainly, from the projections of the main airframe manufacturers, there is a feel that they will continue to provide continuing and expanding markets for their products. China's rapid industrialization, and in particular the development of its manufacturing industries, has also led to a massive growth in its use of air cargo but to export commodities, but also bring into the countries components. Much of this traffic has come in through three major gateways,Shanghai, Beijing and Guangzhou (Figure 1 and Figure 2). The airports at these cities have become focal points in the countries interactive domestic and international freight network. Therefore,globalization will not only effect on the Chinese airports,but also on local cities' economic.

Passenger Traffic of Major Airports in China
Bejing Capital53,611,74755,938,13665,375,09573,948,114
Guangzhou Baiyun30,958,46733,435,47237,048,71240,975,673 Shanghai Pudong28,920,43228,235,69131,921,00940,578,621
Shanghai Hongqiao22,632,96222,877,40425,078,54831,298,812 Shenzhen Baoan20,619,16421,400,50924,486,40626,713,610
(Figure 1, Source: Civil Aviation Administration of China, 2011)

Passenger Traffic Growth
(Figure 2, Source: Civil Aviation Administration of China, 2011)

3. Literature review
3.1 The consequences of privatization and internationalization of the airport industry Airport privatization and the emergence of new international airport operators has major implications for the airport industry. With the increased number of potential airport investors, there has been considerable debate as to which type of investor is likely to be the most successful and most appropriate for the long-term development of the airport industry. As with many other industries, growing the business through mergers and acquisitions can produce higher returns and increased shareholder value. Also risks may be reduced by going global, thereby placing less relevance on any one national economy and lessening exposure to downturns in individual economies (Graham, A 2008). The reasons for the contemporary globalization processes from the latter part of the 20th century,and their larger implications, are much debated. For example,Friedman, T,suggests the world is "flat" in the sense that globalization has leveled the competitive playing...
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