The United States federal government should close the United States Department of Transportation
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- Airport privatization is comparatively better than public ownership.
- Privatization is key to efficiency gains.
- Airport privatization improves costs for a litany of reasons.
- Privatization decreases waste spending and ensures only the most cost efficient projects are chosen.
- Airport privatization is popular and benefits all those involved.
- Allowing airport privatization is key -- creates efficiency, lower costs, and boosts overall economy.
Exts – CP Solves (General)Private ownership of airports facilitiates efficiency and success -- best studies prove.Poole 09- director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation (Robert, Airport Ownership Matters, The American Conservative Union FOundation Issue 146 - December 23, 2009 http://www.conservative.org/wp-content/themes/Conservative/bl-archive/Issues/issue146/091221gov.php)//EL What difference does it make who owns and operates an airport? Economists and management consultants theorize that it should make a difference to airport performance, since different owners would pursue different goals and operate under different incentives. One of the best studies to examine this question empirically came out last year in the Journal of Urban Economics. Tae Oum, Jia Yan, and Chunyan Yu’s paper is “Ownership Forms Matter for Airport Efficiency: A Stochastic Frontier Investigation of Worldwide Airports.” (http://dx.doi.org/10.1016/j.jue.2008.03.001) Oum and his colleagues used a data set of 109 airports of a variety of sizes and types. Of those in the 2004 sample, 27 were owned and operated by a city or state government, 25 by a U.S. airport authority, 16 had majority or totally private ownership, 12 were public-sector corporations, 7 were owned by U.S. port authorities, and 12 had mixed ownership. Nearly all previous studies of comparative airport performance have largely ignored the ownership question, according to the authors. In addition, their analysis used a broader set of inputs and outputs than previous studies to measure airport efficiency. The econometric technique they used is called the stochastic frontier method. It’s similar in principle to the “production possibilities frontier” you may remember from Economics 101—that any firm or agency has an optimum (cost-minimizing) set of outputs (the frontier), but may fail to achieve it due to various inefficiencies and constraints. The paper’s math is beyond me, but assuming they are competent econometricians, let’s focus on what their analysis found. First, airports in the categories of (a) private (or majority private), (b) public corporation (corporatized), and (c) airport authority are more efficient than those with various forms of majority or 100% government ownership. Second, among those with the four different types of government ownership, the least efficient are those owned by U.S. port authorities. Third, in those metro areas with multiple airports, efficiency is lower when those airports are government-owned, but not when they are owned by any of the corporate forms. Based on these results, the authors reach the following policy conclusions: Countries considering airport privatization should transfer 100% (or at least a majority stake) to the private sector and should avoid mixed ownership with a government majority; The Unites States should reconsider ownership and management of airports by port authorities; and, Although the efficiency of airports directly owned by city and state governments is lower than that of airport authority airports, the difference is not statistically significant. Hence, further research on this aspect is called for. Airport privatization is comparatively better than public ownership.Frost & Sullivan 6- an American firm which provides customer-dependent market research & analysis, growth strategy consulting and corporate training services.(“Airport Privatisation” April 2006 http://www.researchandmarkets.com/reports/358103/airport_privatisation.pdf)//EL Airports and airlines have historically been considered as essential components of the national aviation system, and hence both were regarded as public utilities. Due to this approach, operational and handling activities were contemplated as being fundamental for the development of the airport business, and commercial activities had a less important role to play. For that reason, airport assets and property have always been publicly managed and commercial activities have occasionally been contracted or outsourced to private companies. Within such a framework, economic regulation was seen as superfluous. The traditional airport management model becomes visibly unsustainable when most governments begin to be concerned about the burden of airport financing and its lack of efficiency. However, for many years, a majority of airports around the world have continued to operate under this model and some still remain attached to it. Since the 1980s, the industry started to evolve with changes being brought about in the traditional airport management model. Currently, governments are progressively regarding airports as potential profit-making enterprises rather than merely considering them as part of the infrastructure suppliers. There are three main potential economic gains obtained from privatization, namely improvements in operating efficiency (the private for-profit business model more often leads to a further exploration for means to cut costs and boost revenues than public management), the introduction of new management styles and marketing skills directed to serve users with a more consumer-oriented approach, and better investment decisions. However, in many cases, these investment decisions might also imply under investment or capacity reductions, which mandates the presence of a regulatory environment. Privatization is key to efficiency gains.Gillen and Cooper 99- Ph.D. (University of Toronto) Director, Centre for Transportation Studies YVR Professor of Transportation Policy Professor and Chair AND** post-graduate researcher at the Institute of Transportation Studies, University of California, Berkeley (David and Douglas, “Public Versus Private Ownership and Operation of Airports and Seaports in Canada” Oct 20, 1999, The Fraser Institute http://oldfraser.lexi.net/publications/books/essays/chapter1.html)//EL Airports and seaports have much in common. They serve a multitude of user groups. They involve investments that are large and long lived. They create externalities. They are both perceived as a means of realizing economic growth and development. Both have moved some distance from public federal ownership. The federal government began to market airports in the late 1980s. Seaports have been shifted to a significant extent to autonomous local port authorities. Although these represent significant moves, there is a considerable way to go. Efficiency gains can be achieved through greater private contracting for building and services; there is ample evidence for this in all modes. The most significant gain from greater private participation is in the flexibility with which the private sector is able to use resources. This results in substantial increases in productivity and consequent reductions in cost. There is considerable debate as to the monopoly power of airports and ports. Changing technologies, intermodalism, and network strategies by carriers have all led to a diminution of market power. Nonetheless, where monopoly power may be troublesome, corrective regulation may be required. It should be noted, however, that regulation is not without its own problems. Perhaps the most important outcome from moves to corporatization and privatization is that of removing investment and pricing decisions from the hands of politicians and bureaucrats, who have some grand notion that building airports, ports, roads, and railroads will somehow provide a panacea for the economic ills of a region or nation. What has generally happened is that government has not only provided the capacity but has underpriced it as well. It should be remembered that transportation is a derived demand and neither investments in capacity nor policy initiatives will alter economic activity in a substantive way. This simple notion seems to be lost to the proponents of public ownership. In their view, privatizers fail to see the "market failures," including the need for government to provide public services. The "publicizers" see government as wise, disinterested, and technically competent. The evidence is far from compelling for this view, particularly when government intervenes to try to direct markets. Government failure has done more harm than has market failure. Privatization, or at the very least corporatization, provides a superior solution. Airports can and should be privatized -- multiple examples worldwide. Edwards and DeHaven, 10—*director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation, engineer from MIT AND **budget analyst on federal budget issues for the Cato Institute (Chris and Tad, “Privatize Transportation Spending”, Cato Institute, 6/17, http://www.cato.org/publications/commentary/privatize-transportation-spending)//EM A final area in DOT to make budget savings is aviation. Federal aid to airports should be ended and local governments encouraged to privatize their airports and operate without subsidies. In recent decades, dozens of airports have been privatized in major cities such as Amsterdam, Auckland, Frankfurt, London, Melbourne, Sydney and Vienna. Airport privatization improves costs for a litany of reasons.Poole, 94 [Robert W. Jr., Director of Transportation Policy, Reason Foundation, http://www.policyarchive.org/handle/10207/bitstreams/5983.pdf, “Guidelines for Airport Privatization”, Accessed Jun 25, //SH] One of the most common benefits of substituting a private operator for a government department is greater efficiency in operations. In part this is due to the different incentives at work in the two sectors. Private-sector managers are generally evaluated and compensated in part based on the economic performance of the enterprise; this is very seldom the case in the public sector. Second, the public sector is hampered by such constraints as civil service (which makes it difficult to fire incompetent staff or to reward outstanding performance), cumbersome government procurement regulations (which stretch out the time and increase the cost of purchasing supplies and equipment), and micromanagement from higher levels (either departmental or political). The private sector may also benefit from economies of scale. A firm that owns and/or operates multiple airports may be able to purchase supplies in bulk, operate centralized accounting, personnel, and other support services to serve all the airports, and take advantage of other economic benefits of larger size. In addition, the private sector is likely to be less constrained and more willing to contract out functions that can be performed more cost-effectively by other firms. For example, airport fire and rescue service at privately managed Burbank (CA) Airport is contracted out to a private firm. Thus, the single decision to privatize the airport (via management contract, lease, or sale) can serve to depoliticize a potential host of smaller-scale contracting-out decisions, each of which might have involved a political wrangle if it had to be made by a government department. Privatization decreases waste spending and ensures only the most cost efficient projects are chosen.Poole, 94 [Robert W. Jr., Director of Transportation Policy, Reason Foundation, http://www.policyarchive.org/handle/10207/bitstreams/5983.pdf, “Guidelines for Airport Privatization”, Accessed Jun 25, //SH] A principal reason why the World Bank is now urging privatization of major infrastructure (including airports) in developing countries is to minimize the risk of unwise investment, leading to “white elephant” projects which cost several times what they can generate in revenues. In this country, airlines have grown weary of being faced with grandiose plans for architectural monuments (often referred to as Taj Mahals) posing as new airport terminals. Recent cases in point include the (now-canceled) JFK 2000 project to build a new central terminal at New York's Kennedy International airport, the large new terminal at Washington National airport, and the very costly new Denver International airport. How and why does privatization make a difference in new-project development? Privatization of airport capital project development (whether by sale, long-term lease, or BOT) shifts many of the risks from the taxpayers to private investors. This, in turn, forces a high degree of “due diligence” in reviewing the design and cost of the project, and especially an insistence on “investment-grade” traffic and revenue forecasts. Privatization helps to ensure that project decisions are made on economic and financial grounds, not on political grounds. Airport privatization is popular and benefits all those involved.Poole, 94 [Robert W. Jr., Director of Transportation Policy, Reason Foundation, http://www.policyarchive.org/handle/10207/bitstreams/5983.pdf, “Guidelines for Airport Privatization”, Accessed Jun 25, //SH] Airport privatization is relatively new to the United States, but is rapidly becoming the model for airport operations around the world. Depending on the economic and political circumstances, contract management, a long-term franchise for new facilities, a long-term lease, or outright sale can offer benefits to taxpayers and airport users alike. The appropriate mode of privatization depends on the specifics of each case, and must be the subject of careful analysis. Done well, privatization can provide net benefits for all parties by adding value to the airport's operations. Airlines can receive assurances of cost controls; air travelers can obtain a higher level of service; the airport agency can obtain some new revenues; and the new airport operator a new source of business. Allowing airport privatization is key -- creates efficiency, lower costs, and boosts overall economy.Ghaus 02- Chairman and Chief Executive Officer at Clean Energy, where he has designed and developed solar recycle system Lead Partner at Warren Aircraft Leasing & Financing, where he is providing financial assistance, leasing and sales in the airlines industry. (Mujtaba, “Why doesn't the U.S. practice what it preaches? Privatize Airports- Catch up the World” https://www.hightable.com/air-transportation/insight/why-doesnt-the-us-practice-what-it-preaches-privatize-airports-catch-up-the-world-21751)//EL Many of these countries have reported major improvements in service, and in the quality of facilities due to private sector participation. Not every experience has been positive, of course, but the overall conclusion is that carefully structured and thoughtfully executed private sector participation can produce substantial benefits to the travelling public, and can reduce costs to airlines, as well. Compared to the rest of the world, the U.S. experience with privatization of airport facilities is quite limited. U.S. efforts at privatization have taken two primary forms: management contracts at a handful of airports and the FAA's undersubscribed pilot program of airport privatization Collectively, the relatively stringent restrictions on private operation of airports under the pilot program, coupled with airline hostility to privatization, doomed the pilot program. Today, only one U.S. airport, Stewart Airport in Newburgh, New York, participates in the program. Stewart Airport is operated by National Express Group, a United Kingdom-based transport company, under a 99-year lease. In 2000, following approval by the FAA, Stewart began privatized operation under a lease that provided $35 million for New York State, $25 million of which was paid at the lease inception. The airport pays a variable rent based on 5 percent of gross income. In late April 2002, New Orleans Lakefront Airport, a small airport in Louisiana, applied for the FAA's pilot program. There are indications that another small New York airport, Niagara Falls, may also apply for the pilot program. However, an earlier proposal to privatize Niagara Falls with the Spanish-based private airport operator, Cintra, was rejected. Airline Opposition to Privatization. The airlines have consistently resisted privatization of U.S. airports and were responsible for many of the stringent restrictions in the FAA pilot program that have left the program unpopular and undersubscribed. The airlines' attitude to date toward airport privatization is captured in a statement made by an Air Transport Association spokesman on privatization: "What is in it for the traveling public other than a higher cost?" This is an ironic position for a private sector organization to take: that is, that private sector ownership or operation of a public service will lead to higher costs. If it were true, it would also be an excellent argument for nationalized airlines. As several of the private airport management companies have pointed out, however, there are potentially substantial, direct benefits to the airlines from efficiencies that can be achieved by privatization. BAA has, for example, reduced landing fees at Heathrow in real dollar terms since the airport was privatized in 1987. Indeed, the experience of many (but certainly not all) of the countries that have utilized private sector participation in airports is that it brings the most modern facilities development and management techniques, and incentives for efficiency, to a vital area of their national economies. Why Privatization of U.S. Airports Should Be Encouraged. Given that the U.S. airport system has in the past satisfied the demands of the busiest and largest civil aviation system of any nation in the world, some might be tempted to conclude that U.S. airports do not need the option to privatize. That would be the wrong conclusion for several reasons. The most important reason to create the conditions that would allow greater private sector participation in U.S. airports is that it could provide an important means to bridge a looming funding shortfall in airport development costs. In the wake of September 11 and the new mandates of the Aviation and Transportation Security Act (ATSA), federal monies are increasingly likely to be used for airport security costs, leaving fewer resources for airport capacity enhancement projects. Similarly, federal AIP grant funds are more likely now to be used for security costs rather than capacity expansion. In light of this development, privatization of U.S. airports could potentially tap new sources of private capital--including private equity--which airports will need to meet the growing demand for capacity and facilities. And, as the GAO reported in December, the demand for capacity enhancement will return, and far faster than many may have imagined. Hence, the use of innovative methods of finance and operation may be needed to allow U.S. airports to meet all the demands--security, capacity, renewal of older facilities--that they will face in the coming decades. The second reason is closely related to the first: privately owned or operated airports are more likely than publicly owned or operated entities to be able to control costs, increase revenues, and instill greater customer-orientation at their facilities. Although U.S. publicly owned airports are much more likely than their publicly owned counterparts outside the United States to take a commercial approach to airport operations, there are limits on what most public airport operators can do to achieve the same potential efficiencies as privately managed enterprises. A study completed in 1999 that compared the operations of privatized and publicly operated international airports concluded that privatized airports have a significantly higher level of passenger-responsiveness than government-owned airports. It is difficult for a publicly-owned airport to function like a private enterprise, although a number of our U.S. airport clients do an admirable job in that regard. We believe that the U.S. should not be the only venue in the world where airport privatization is not available as a tool to maintain and improve airports and airport services. In our view, the top airports of the 21st century are likely to be those that maximize the use of private management and private capital. If attitudes concerning privatization of U.S. airports remain fixed in the 20th Century, the U.S. aviation system will miss a golden opportunity for its airports to continue to be world leaders in this century. We do not urge that privatization be forced on U.S. airports. Rather, we suggest that the time has come to unburden America's commercial airports from the kinds of restrictions that have deterred private sector participation beyond the rental car counter or the janitorial services contract. In this manner, the cities and states that control our major airports will be empowered with another financial and management tool to secure the best service and the lowest cost for all the airport stakeholders. Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. Objective files -> Pop Warner History files -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose files -> Fall 2013 Spring 2014 Program Data: Standard 1 Exhibit 4d files -> Hanban – asia society confucius classrooms network 2010 request for proposal files -> Northern England’s set-jetting locations Download 1.4 Mb. Share with your friends:
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