Most commercial airports in the United States, as well as throughout the world, were developed by governmental authorities. They were laid out when the airline business was in its infancy and required substantial government subsidies. Governments built them because private enterprise could not earn an acceptable rate of return on them.
Most transportation systems, including the railways, required significant government investment to get a start. Governments argued rightly that investing in transport systems was a key step in developing the country's economy. The ability to move people and goods is critical for economic development.
Most enlightened governments recognized that railways were an improvement over canals, which were an improvement over wagons, etc. This is why they invested in them before they became viable operations. The same concept applies to airplanes. They are a better way to move people and select goods, especially over long distances. Failure of a country like the United States to facilitate the development of better forms of transport, e.g. commercial air that were being developed by other countries would have consigned it to second class status with significant economic ramifications.
Most airports in the United States are operated as not for profit enterprises. They operate like a business, i.e. cover all costs and maintain or increase the balance in the general fund, which is akin to the shareholders equity in a private business.
Privatization requires a buyer who believes that he can earn a satisfactory return on the investment required to buy the airport and/or take over its operations. There are basically two ways for a private operator to perform better than a public operator. He must increase revenues or decrease costs or a combination thereof. Otherwise, there is no incentive to invest in the airport or its operations.
If an airport is not being managed properly, a private owner/operator can usually do better than a government operator. But if it is managed properly, a private owner/operator cannot do any better than the public owners.
There are two reasons why a significant number of airports in the United States have not been privatized. One is political. Turing an airport over to a private operator goes against the conventional wisdom for many people. They other is an inadequate return on the investment, which may say that many U.S. airports are managed rather well, and the potential private operators know that there are not enough improvements (increased revenues and decreased costs) to generate the returns their shareholders require.
henry6 wrote: oltmannd wrote: ,You don't go far enough with your supposition of why airfields are municipally owned. Yes, they wanted to attract air service, but why?For the same reason they wanted railroads in the 1800s and a major highway or port. To attact buisiness and people. To be a "someplace".
oltmannd wrote: ,You don't go far enough with your supposition of why airfields are municipally owned. Yes, they wanted to attract air service, but why?
,You don't go far enough with your supposition of why airfields are municipally owned. Yes, they wanted to attract air service, but why?
For the same reason they wanted railroads in the 1800s and a major highway or port. To attact buisiness and people. To be a "someplace".
A little prairie town doesn't want the RR to come thru town so they can be dot in the Railway Guide, they want their land to be worth more. They want prosperity. They want to be more wealthy. They want better access to goods and sevices. They want goods and services that cost less. They want "a better life".
An area might do better with a gov't owned and operated airport than they do without one. But that does not mean they they can't do even better if they can find a way to give the airport operations some profit motive.
This is not the same as hiring a concessionaire whose only way to increase profit is to cut cost.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
blue streak 1 wrote:carnej1: There is a private airport in the US at Wilmington, Oh. It is operated by either DHL or ASTAR airlines for DHL. It is an old air force base and the actual ownership is unknow to me. however DHL is proposing to have UPS move all its freight and if that occurrs then all operations will move to Louisville, KY, That would be DHL's second move in 5 years since they orighnally moved from Cincinatt airport.
And someone earlier reprted Huston. So, why aren't Logan, O'hare and Midway, LAX or any in between at least operated if not owned, by private enterprisie. And, that leads to highway. Those proposing toll roads in NY, NJ and PA be privatized by purchase or lease, are therefore in the correct lane!
RIDEWITHMEHENRY is the name for our almost monthly day of riding trains and transit in either the NYCity or Philadelphia areas including all commuter lines, Amtrak, subways, light rail and trolleys, bus and ferries when warranted. No fees, just let us know you want to join the ride and pay your fares. Ask to be on our email list or find us on FB as RIDEWITHMEHENRY (all caps) to get descriptions of each outing.
It is my understanding that it in many cases overseas airports are publicly owned but are operated by private sector companies as a "concession". Big European construction firms like Hochtief (Germany) and Skanska (Sweden) are major players in this market. It is very common in Europe (and other parts of the world) to have public infrastructure (toll roads,bridges,tunnels, ect.) operated and maintained by "concessionaries".
There are a few examples in the US as well...
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
henry6 wrote: macjet wrote: There are many airports that are public use and privately owned. Houston's David Wayne Hooks is one that comes to mind. Airports are usually cash cows for whatever entity owns them. Usually they are owned by Port Authorities, counties, or the city themselves. Airlines pay landing fees and gate fees. General aviation (all aircraft except military and airline) pays through the FBO (Fixed Base Operator) and landing fees. The FBO's pay substantial land/hanger leases and fuel fees. All aircraft operators pay a Federal fuel tax which is placed into the Aviation Trust Fund. This money pays for runway improvements, ATC facility costs, and navigation equipment (except for GPS which is maintained by the DOD). But, to follow thorugh with the thoughs of our posters who believe government should be out of everything, it is very intrigueing to have airports privately owned and operated. I did not realize that Huston, or any other, airport in this country (other than a few private club or very small fields) were other than municpally owned. As I noted, the concept is foreign to most of us and the first I heard of it was in a recent article concerning Heathrow. Since the U.S. is a big free enterprise, private capital, country, why has this not been done more often here? At the risk of answering my own questions, is it because, in order to attract air service, municipalities felt it necessary to build an airport? Similar to those towns in the 1800's who gave land and bond money in order to get a railroad to build into town? In the case of the railroad, the company took the property but in the case of the airport, the municipality retained ownership? So, why, today, with the cry over funding Amtrak, with those who feel it should be and has to be privatized to make profit, aren't we clamoring to sell off airports to private corporations for the same reason?
macjet wrote: There are many airports that are public use and privately owned. Houston's David Wayne Hooks is one that comes to mind. Airports are usually cash cows for whatever entity owns them. Usually they are owned by Port Authorities, counties, or the city themselves. Airlines pay landing fees and gate fees. General aviation (all aircraft except military and airline) pays through the FBO (Fixed Base Operator) and landing fees. The FBO's pay substantial land/hanger leases and fuel fees. All aircraft operators pay a Federal fuel tax which is placed into the Aviation Trust Fund. This money pays for runway improvements, ATC facility costs, and navigation equipment (except for GPS which is maintained by the DOD).
Airports are usually cash cows for whatever entity owns them. Usually they are owned by Port Authorities, counties, or the city themselves. Airlines pay landing fees and gate fees. General aviation (all aircraft except military and airline) pays through the FBO (Fixed Base Operator) and landing fees. The FBO's pay substantial land/hanger leases and fuel fees. All aircraft operators pay a Federal fuel tax which is placed into the Aviation Trust Fund. This money pays for runway improvements, ATC facility costs, and navigation equipment (except for GPS which is maintained by the DOD).
But, to follow thorugh with the thoughs of our posters who believe government should be out of everything, it is very intrigueing to have airports privately owned and operated. I did not realize that Huston, or any other, airport in this country (other than a few private club or very small fields) were other than municpally owned. As I noted, the concept is foreign to most of us and the first I heard of it was in a recent article concerning Heathrow. Since the U.S. is a big free enterprise, private capital, country, why has this not been done more often here? At the risk of answering my own questions, is it because, in order to attract air service, municipalities felt it necessary to build an airport? Similar to those towns in the 1800's who gave land and bond money in order to get a railroad to build into town? In the case of the railroad, the company took the property but in the case of the airport, the municipality retained ownership? So, why, today, with the cry over funding Amtrak, with those who feel it should be and has to be privatized to make profit, aren't we clamoring to sell off airports to private corporations for the same reason?
Whoa, there! Nobody has asserted that gov't should be out of everything! Only, that gov't is generally a lousy service provider and that free market forces shape efficient operations and use of capital.
Amtrak is an uninovative, inefficient mess. It needs fixed. Inovation and efficiency will require changing the rules of the game. It doesn't necessarily mean the gov't has no role. Lots of older threads on this with chapter and verse.
You don't go far enough with your supposition of why airfields are municipally owned. Yes, they wanted to attract air service, but why?
macjet wrote: I wouldn't be too quick to support Daley. The man is a criminal and under US Federal law should be in prison. Daley single handedly shut down a Federally funded, public use airport overnight (Chicago Meigs) under the cover of darkness without any legal authority. He ordered bulldozers to destroy the runway overnight without notifying the FAA. Without knowledge of this the FAA wasn't able to issue a NOTAM (Notice to Airmen) about the closed airport. Aircrews were dispatched to this airport without any idea that the runway had been destoryed. We were very lucky that somone didn't try to land at night on a destroyed runway with bulldozers sitting on it. I'm sure the guys with aircraft trapped there weren't too happy either.
Meigs Field was a misuse of lakefront park land and should never have been established in the first place. It had been LEGALLY closed about a year or two previously but was given a stay of execution when enough local business nabobs griped about losing their personal landing strip that allowed them to avoid O'Hare and Midway. It had little to no commercial service during its existence and was scheduled to be closed again in about a year and a half anyway.
henry6 wrote: oltmannd wrote: I don't completely understand what is being privatized here. Who owns the airport? Is the operator allowed to set gate fees, ticket fees, etc. or are they just a hired contractor.The business model is unclear from the article. So why has no one here in the home of the free and the brave, the home of entrapenural spirit, of free enterprise, why has it not been done here? It certainly should be!!!!
oltmannd wrote: I don't completely understand what is being privatized here. Who owns the airport? Is the operator allowed to set gate fees, ticket fees, etc. or are they just a hired contractor.The business model is unclear from the article.
I don't completely understand what is being privatized here. Who owns the airport? Is the operator allowed to set gate fees, ticket fees, etc. or are they just a hired contractor.
The business model is unclear from the article.
So why has no one here in the home of the free and the brave, the home of entrapenural spirit, of free enterprise, why has it not been done here? It certainly should be!!!!
There are many airports that are public use and privately owned. Houston's David Wayne Hooks is one that comes to mind.
An article I read about Europe is that Heathrow in London, the Madrid, Spain airport, and several others were owned and operated by a single company. I think that's great! And if they own and operate, then they can do what the traffic will allow, so to speak. I am anticipating, and will agree with, your comments of our governments getting involved in things like this and mucking it up for sure. But, wow! What a concept!! So why has no one here in the home of the free and the brave, the home of entrapenural spirit, of free enterprise, why has it not been done here? It certainly should be!!!!
Well, it's a start.
http://newsblogs.chicagotribune.com/clout_st/2008/09/daley-announces.html
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