Contribution to the study of PPP arrangements in airport development, management and operation

Cruz, Carlos and Marques, Rui (2010): Contribution to the study of PPP arrangements in airport development, management and operation.

Abstract

Following the liberalization wave in the airline sector, airports have been gradually taken out of the public sphere and open to the private initiative. This phenomenon is generally referred to as privatization, but not all the cases consist of, in fact, a full divestiture of assets. Although infrastructure construction, management and financing are undertaken by the private sector during a pre-defined period, usually 30 years or more, the property remains public or is transferred to the public domain after that period. This is a form of Public-Private Partnership (PPP) where two different models can be found: institutionalized PPP or a typical contractual regime, such as the concession arrangements. PPP options have been a “hot” topic over the last decade, being developed in several sectors, such as energy, water, road and seaports transportation infrastructures, etc, but few studies in the literature can be found on the PPP projects development in airport systems, for example, as far as risk-sharing is concerned. This paper looks at recent developments in airport “privatization” and “deregulation”, distinguishing privatizations from PPP arrangements, through a case study approach, and establishing a comparative analysis of different PPP models used for airport management. Some comments are made about the Portuguese model and the announcement of future privatization.

• Item Type: MPRA Paper
• Language: English
• Keywords: Airport Concessions; Portugal; Public-Private Partnerships; Privatization.
• Subjects: L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R42 - Government and Private Investment Analysis ; Road Maintenance ; Transportation Planning; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics

References

Allen, G., 2001. The private finance initiative (PFI). Research Paper 117, Economic Policy and Statistics Section, House of Commons Library.

Ashford, N., Stanton, H., Moore, C., 1997. Airport Operations, Sec. Ed. McGraw Hill, New York.

Barbot, C., 2009. Vertical Contracts Between Airports and Airlines: Is there a trade-off between welfare and competitiveness? Working Paper 1, CETE, School of Economics, Oporto.

Bel, G., Fageda, X., 2009. Privatization, regulation and airport pricing: an empirical analysis for Europe. Journal of Regulatory Economics 37 (2), 142-161.

Bennett, J., Iossa, E., 2006. Building and managing facilities for public services. Journal of Public Economics 90 (10-11), 2143-2160.

Betancor, O., Rendeiro, R., 1999. Regulating Privatized Infrastructures and Airport Services. World Bank Institute, Washington DC.

Button, K., 2005. Commercialization and Deregulation: Theoretical Approaches and Lessons from Air Transportation, In 4th Conference on Applied Infrastructure Research, 8 October, Berlin.

Button, K., Costa, Á., Cruz, C., 2007. Ability to recover full costs through price discrimination in deregulated scheduled air transport markets. Transport Reviews 27 (2), 213-231.

Costa, C., Neiva, R., Santos, M. Cruz, C., 2010. Airport investment analysis in unstable markets. In Air Transport Research Society (ATRS) World Conference, 6-9 June, Oporto.

Cruz, C., Marques, R., 2010. Overview of contract arrangements in concessions: an application to seaport terminals. Working Paper, IST, Lisbon.

Demsetz, H., 1968. Why regulate utilities? Journal of Law and Economics 11 (1), 55-66.

Dey, P., Ogunlana, S., Takehiko, N., 2002. Risk management in build-operate-transfer projects. International Journal of Risk Assessment and Management 3 (2-4), 269-291.

Engel, C., Fischer, R., Galetovic, A., 2009. The basic public finance of public-private partnerships. Cowles Foundation Discussion Paper 1618, Yale University, Connecticut.

European Commission, 2004. Green paper on Public-Private Partnerships and community law on public contracts and concessions. COM 327 final, Brussels.

European Council, 1996. Directive on access to the groundhandling market at Community airports (96/67/EC of 16 October).

Freathy, P., 2004. The commercialisation of European airports: successful strategies in a decade of turbulence? Journal of Air Transport Management 10 (3), 191-197.

Fuhr, J., Beckers, T., 2009. Contracts, financing arrangements, public ownerships – an empirical analysis on the US airport governance model. Transport Reviews 29 (4), 459-478.

Good, D., Röller, L., Sickles, R., 1993. US airline deregulation: implications for European transport. The Economic Journal 103 (419), 1028-1041

Graham, A., 2008. Managing Airports: an International Perspective. Third Ed. Elsevier, Oxford.

Grimsey, D., Lewis, M., 2002. Evaluating the risks of public private partnerships for infrastructure projects. International Journal of Project Management 20 (2), 107-118.

Guasch, L., 2004. Granting and Renegotiating Infrastructure Concessions: Doing it Right. WBI Development Studies, World Bank, Washington, D.C.

Guasch, L., Laffont, J., Straund, S., 2006. Renegotiation of concession contracts: a theoretical approach. Review of Industrial Organization 29 (1-2), 55-73.

Juan, E.J., 1996. Privatizing airports: options and case studies. Public Policy for the Private Sector, Note No.82, World Bank.

Lipovich, G., 2008. The privatization of Argentine airports. Journal of Air Transport Management 14 (1), 8-15.

Marques, R., 2010a. Together or separately? The efficiency and market structure of Portuguese airports. Forthcoming in Journal of Air Transport Management.

Marques, R., 2010b. Do the incentives in the aiport regulation matter? A case-study in Portugal. Working Paper, Technical University of Lisbon.

Marques, R., Brochado, A., 2008. Airport regulation in Europe: Is there need for a European Observatory? Transport Policy 15, 163-172.

Marques, R., Berg, S., 2009. Risks, contracts and private sector participation in water utilities. PURC Working Paper 25, University of Florida, Gainesville.

Meda, F., 2007. A game theory approach for the allocation of risks in transport public private partnerships. International Journal of Project Management 25 (3), 213-218.

Moles, P., Williams, G., 1995. Privately funded infrastructure in the UK: Participants' risk in the Skye Bridge project. Transport Policy 2 (2), 129-134.

Neufville, R., Odoni, A., 2003. Airport systems: planning, design and management. MacGraw-Hill, New York.

Nisar, T., 2007. Risk management in public-private partnership contracts. Public Organization Review 7 (1), 1-19.

Oum, T., Adler, N., Yu, C., 2006. Privatization, corporatization, ownership forms and their effects on the performance of the world’s major airports. Journal of Air Transport Management 12 (3), 109-121.

Oum, T., Yan, J., Yu, C., 2008. Ownership forms matter for airport efficiency: A stochastic frontier investigation of worldwide airports. Journal of Urban Economics 64 (2), 422-435.

Partnerships Victoria, 2001. Public Sector Comparator: Technical Note. Department of Treasury and Finance, Melbourne.

Phang, S., 2007. Urban rail transit PPPs: Survey and risk assessment of recent strategies. Transport Policy 14 (3), 214-231.

Skamris, M., Flyvbjerg, B., 1997. Inaccuracy of traffic forecasts and cost estimates on large transport projects. Transport Policy 4 (3), 141-146.

Thatcher, M., 1993. The Downing Street years. Harper Collins, London.

Tomová, A., 2009. PPP projects and airports: experience and state in world regions. In 8th Conference on Applied Infrastructure Research, 9-10 October, Berlin.

Truitt, L., Esler, M., 1996. Airport privatization. Policy Studies Journal 24 (1), 100-110.

Wit, J., 2004. Privatization and Regulation of Amsterdam Airport, In Forsyth, P., Gillen, D., Knorr, A., Mayer, O., Niemeier, H., Starkie, D., (Eds), The economic Regulation of Airports – Recent Developments in Australasia, North America and Europe, Ashgate, England, pp. 83-99