With the increasing privatization of government-owned entities, you may wonder who owns airports. Do tax dollars go toward the maintenance of these airports, or are these airports making profits off of passengers? Are airports private companies?
Airports are not private companies if the state government owns the premises. In this case, government-run public airports host commercial airlines for the public. However, there are certain non-commercial airports that a company or individual privately owns and manages.
Read on to learn more about what makes airports privately or publicly owned. I will also discuss the pros and cons of privatizing an aviation business and give examples of famous independent airports.
Are Airports Private Companies?
Typically, commercial airports are not private companies because they can be used by anyone with the means to use them. They are managed by state-funded entities such as the local or regional authorities.
Although publicly owned airports are government-run, they are not necessarily under the federal government’s jurisdiction. The city or state government may handle airport operations. An example of this is the JFK airport in New York City, which the city manages.
Interestingly, airports can also be jointly owned by two different governments. One example is the Newark-Liberty International Airport, owned by the cities of Newark and Elizabeth.
However, two types of private airports exist alongside commercial ones. The first type refers to a commercial airport that a private organization manages, while the second is an airport that houses a private airfield or hangar for personal use.
Are Airports Privately Owned?
Airports are privately owned if they are funded and managed by an independent business entity. This is opposed to the government managing and funding all aspects of an airport. Having the authorities manage an airport means local regulations apply to all incoming passengers and air traffic.
More often than not, having the government regulate airspace in an urban area can benefit the city. Some airports curb incoming and outgoing air traffic during certain hours of the day to counter air and sound pollution.
Additionally, some regional governments in smaller cities enforce airport opening and closing times to budget their resources better. You can read my article about whether airports are open 24/7 to learn more about what affects an airspace’s operating times.
How Many Airports Are Privately Owned?
Only one airport in America is privately owned — the Branson Airport in Missouri. However, private airports are much more common outside the United States. For example, India has 17 independent airports, while the United Kingdom operates 13 private airports.
What Is the Largest Privately Owned Airport?
The largest privately owned airport in the world is London Heathrow Airport, with its total size measuring 3032.04 acres (1227 hectares). The British Airport Authority sold its government stake in Heathrow in 1987 following the large-scale privatization of the aviation sector.
Why Are Airports Privatized?
Airports are privatized for the following reasons:
- To earn a profit. Like all private entities, privately owned airports have the main goal of turning a profit and making money. By successfully attracting more customers to the premises, the airport can charge airlines a higher fee to use the airport.
- To build better and more advanced facilities. Private airports are more likely to invest money into infrastructure and facilities than publicly owned ones. Better facilities also encourage customers to pay higher private airport fees than public airports.
- To attract more airlines. A healthy customer base willing to spend extra for a better experience also incentivizes more airlines to approach and fly from the private airport. This allows private airports to increase their profit margin.
Benefits and Disadvantages of Private Airports
There are certain advantages as far as private airports are concerned, namely:
- Tax revenue: Like any private business, the owning entity must pay government taxes since they profit from the industry. Similarly, the owners of private airports have to pay property and business taxes on the private airport.
- Better service: Due to competition with larger publicly owned airports, privately owned airports have a better incentive to provide better customer service. So although they may be pricier than public airports, private airports often offer better service, management, and facilities.
On the other hand, there are downsides to private airports, including:
- Increased charges: Since private airports don’t receive government tax funding and must pay taxes on the airport itself, the costs are passed on to the customer. This means an overall increase in ticket fares, and airport facilities such as dining and lodging may be more expensive.
- No room for risks: Since a private airport is essentially a for-profit business, it lacks the incentive to innovate to avoid failure. Public airports can take risks due to more funding, unlike private airports that rely on investors’ funding. A private airport is run for making money and personal gain and without diligence toward the community.
- Little to no federal oversight: A lack of federal oversight can be dangerous when operating a private airport, making the airport less accountable for its mistakes. Some regulations can involve passenger safety, and a lack of safety to make money can be considered unethical.
How Are Airports Funded?
Public and privately owned airports are funded by those using them. A private airport is for-profit and runs on the passengers’ money. Similarly, state-owned airports use very little tax money for day-to-day operations.
Both types of enterprises are primarily maintained using fees acquired from:
- Rental: Most airports rent out spaces to stores and businesses and earn a monthly profit.
- Landing: An aircraft that lands at an airport must pay fees similar to a tax to use the landing strip.
- Flying: Planes that take off from an airport must pay fees to use take-off facilities.
- Parking: Parking at airports can be costly since it is one of the primary forms of revenue for an airport. The longer the car stays parked in an airport parking area, the more the airport can passively earn.
- Food and beverage markups: Food and drinks at airports can be relatively more costly due to extra fee markups.
- Aircraft parking: Airports charge airlines to use their parking facilities which is why most national carriers fly out of one central airport.
Airports can be private or public. Privately-owned airports are managed by independent entities, while public airports are government-owned. Although the United States has only one private airport, other countries, such as the United Kingdom, have privatized most of their airports and have been successful.