All I Want for Christmas Is Privatized Airports

By Nick Zaiac

As holiday travelers hit the skies, many are running into long lines, canceled flights, and other challenges as congestion builds at the nation’s busiest airports. Facilities problems, like Monday’s power outage at Atlanta’s airport, cause hundreds of flight delays and cancellations every year as these gems of America’s infrastructure stock age into obsolescence. At this time of year, that means ruined holidays.

America’s airports have failed to keep up with their peers in other countries, in part because they rarely have the capital to expand without substantial government subsidies.

American airports are almost universally owned and managed by government entities, typically quasi-independent airport or port authorities. These groups are limited in how they can raise money; unlike most governments they have little independent taxing authority. When a region grows and airport traffic increases, airport revenues do not increase proportionately due to reliance on various forms of government transfer payments. Scarce capital means too few airport gates, dated facilities, and runways that don’t get built.

Private airport ownership is normal in industrial nations and is especially common in Europe. It means access to world capital markets. When potential airport traffic increases these companies have a reason to foresee the change and borrow to build new airport capacity to handle it.

The government realizes the potential of private airports in the United States, and the FAA has a pilot program that’s showing progress.

Most major airports in the United States could benefit from a manager that stands to gain from maximizing airport traffic and has access to the capital markets to be able to build for it. That said, these airports have large, entrenched legacy air carriers that have little reason to welcome new competitors at new airport gates. Lobbying from these carriers would likely stall any privatization of existing major airports.

Secondary airports are a different story. Often situated a little farther from the city center to serve smaller population centers, these airports typically struggle to attract traffic from their larger regional peers. Places like White Plains north of New York, Ontario in Los Angeles, and Sanford in Orlando are close enough to serve outlets for cities with congested primary airports.

Smaller fields, like general-aviation airports, could also relieve pressure by serving smaller, regional routes offered by low-cost carriers. For instance, Southern Airways serves many towns in rural Pennsylvania with flights a few times per day. Other small airlines serve rural towns across the nation. Repealing federal rules that bar foreign low-cost carriers from entering the US market would only make privatization more appealing.

Privatization of small airports and allowing low-cost foreign carriers to enter could mean lower prices and more availability during the holidays. Spreading the passenger load out means new connections between secondary airports and new options for the traveling public. It takes pressure from regional travelers off major hub airports, making bad weather and facilities issues at hubs like Atlanta less severe. And it does this while making better use of existing secondary airport assets by making private companies responsible for the financial risks of running an airport.

Image: Michael Cheng.

Sign up here to be notified of new articles from Nick Zaiac and AIER.