Environmental Engineering Reference
In-Depth Information
Of the 16 UK airports commercialized in 1987, the number of airports with over
30 per cent of their income from commercial sources rose from 40 per cent to 100 per
cent between 1986-1999 (Humphreys et al, 2001). The UK example has shown that
some small airports (less than 200,000 passengers per annum) traditionally believed
to be unprofitable and unable to pay their way can be profitable through innovative
diversification. Such commercial revenue streams include running hotels, operation
of charter flights, business parks, increased retail, maintenance facilities, reservations
centres, fire-fighting services selling training to other airports and even the bulk
buying and selling-on of electricity (Humphreys et al, 2001).
Since privatization, BAA plc has raised the percentage of revenue from commer-
cial sources at its London airports from 49.5 per cent during 1984-1985 to 71.5 per
cent during 1998-1999 (CIPFA, 1986; CRI/CIPFA, 1999). Diversification of BAA
plc's business has been partly stimulated by the UK regulator restricting the amount
of revenue raised from aeronautical charges at its three London airports (Francis and
Humphreys, 2001). Since 1987, BAA's activities have included operation of over 200
duty-free outlets across the world, duty-free operations for a number of airlines, buy-
ing and selling a freight forwarding business, managing shops in hospitals, buying,
operating and selling hotels, buying Lynton Property development group and enter-
ing a joint venture with Macarthur Glen to manage out-of-town shopping centres
(Parker, 1999; Starkie, 1998; Francis and Humphreys, 2001). Diversification on this
scale is of concern in terms of its implications for management time and the impact
that a downturn in non-core business might have on airport operations.
Loss of control of airports
Full privatization means that the government effectively loses control of the airport
and its development. Even when the government owns the airport but allows private
companies to develop and run the infrastructure there are a number of potential risks.
These include buildings being constructed to last the length of the concession and
no longer; cost minimization in construction processes; and the long-term capacity of
site being compromised in favour of short-term revenue generation (Craig, 1999).
The activities of private firms that are working to maximize their shareholder value
may conflict with the needs of the community from a social, economic and environ-
mental perspective.
The result of development pressures and their implications for the economic,
social and environmental sustainability of airports will vary depending upon who
owns the airports. This will determine the goals of the companies concerned, whether
they are driven by profit alone or have the social and environmental interests of the
population at heart, and whether they wish to develop the land and sell on at a profit.
All of these issues may affect the long-term economic plans for a region. Perhaps air-
ports with some form of state ownership could claim to work to the triple bottom
line of environment, social and economic needs of the community/region (Hum-
phreys, 1998).
A key policy question for governments is this: how can the interests of the
nation or region be safeguarded if an airport is sold to the private sector? This issue
has increased the significance of the nature and form of regulation in order to ensure
that the outcomes are compatible with those desired by government.
