KUALA LUMPUR (June 6): The International Air Transport Association (IATA) has urged governments to take a cautious approach when considering airport privatization.

In a unanimously passed resolution yesterday, IATA members called on governments to prioritise the long-term economic and social benefits delivered by an effective airport ahead of the short-term financial gains provided by a poorly thought-out privatisation. 

IATA director general and CEO Alexandre de Juniac said countries were in an infrastructure crisis.

He said cash-strapped governments are looking to the private sector to help develop much needed airport capacity.

“But it is wrong to assume that the private sector has all the answers. Airlines have not yet experienced an airport privatization that has fully lived up to its promised benefits over the long term.

“Airports are critical infrastructure. It is important that governments take a long-term view focusing on solutions that will deliver the best economic and social benefits.

“Selling airport assets for a short-term cash injection to the treasury is a mistake," he said.

IATA said currently about 14% of airports globally have some level of privatisation.

It said as they tend to be large hubs, they handle about 40% of global traffic.

de Juniac said IATA research shows that private sector airports are more expensive.

“But we could not see any gains in efficiency or levels of investment. This runs counter to the experience of airline privatisation where enhanced competition resulted in lower pricing to consumers.

“So we don’t accept that airport privatisation must lead to higher costs. Airports have significant market power.

“Effective regulation is critical to avoiding its abuse—particularly when run for profit by private sector interests," he said.