The International Air Transport Association (IATA) and Deloitte have formulated and released guidance materials aimed at encouraging governments to consider public-private partnerships (PPP) and other variants of privatisation programs for airport infrastructure.
The Airport Ownership and Regulation Guidance brings together current industry best practices, along with results of research that examined the effectiveness of various ownership and operating models.
Alexandre de Juniac, IATA’s Director General and CEO, said: “Airports provide critical infrastructure. It is important that governments considering privatisation or PPP take a long-term view and focus on solutions that will maximise the economic and social benefits of connectivity.
“The aim of Airport Ownership and Regulation is to help governments make better-informed decisions using best-practices gleaned from decades of experience with the good, the bad and the ugly of airport privatisations.”
The first key area explored by the guidance materials focused on the options for models of privatisation. In this respect, governments are encouraged to adopt an aggregate view of airport ownership and operating models and match them to the financial and macro-economic objectives of inviting private participation in airport infrastructure provision and management.
The second area explored the best practices for the process of privatisation. As competitive and transparent transaction process is key in assuring public value for money, governments must assure that bids are evaluated on balanced criteria. Additionally, the key terms of concession contracts must deliver improvement in efficiency, quality of service, and even include a significant investment in the airport for the benefit of airlines and end-consumers.
Lastly, the guidance materials delved into the importance of regulation of privatised airports, highlighting the value of creating a regulatory framework that develops in parallel with an assessment of potential ownership and operating models. Regulation will not only curb potential market abuse, but will undoubtedly lead to the realisation of improved efficiencies and service quality in airport management.
Dorian Reece, Global Airport Lead at Deloitte, said: “The global growth of airports is increasingly putting airports under pressure, increasing the need for governments to explore alternative financing solutions and enhance management efficiency. The current pipeline of airport privatization being considered globally makes this Guidance Booklet timely, and we believe it will support governments to better assess private sector participation options.
“There is a critical need to ensure strategic objectives are appropriately assessed and the benefits and risks understood when evaluating airport ownership and operating model options. Whatever ownership or operating model is applied, governments, investors and aviation stakeholders need to put the end-consumer central to the selection of the optimal solution.”
The Airport Ownership and Regulation Guidance was unveiled during IATA’s 74th Annual General Meeting and World Air Transport Summit in Sydney, Australia.