- IATA Cautions Nigeria, Others on Airports Privatisation
The International Air Transport Association (IATA) has urged governments to take be careful about airports privatisation.
Many African countries, including Nigeria, have slated their airports for either privatisation or concessioning.
IATA’s Director-General and Chief Executive Officer, Alexander De Juniac, who spoke in during an interview in Lagos at the weekend, said the caution became imperative in view of the paucity of infrastructure.
According to the global airlines regulator, governments need to prioritise on 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.
Juniac said: “We are in an infrastructure crisis. 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 privatisation 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.”
According to him, about 14 per cent of airports globally have some level of privatisation saying they tend to be large hubs handling about 40 per cent of global air traffic.
“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.
“We have learnt from our positive experiences with corporatisation, new financing models, and alternative ways of tapping private sector participation. Make informed decisions on ownership and operating models to best protect consumer interests, and lock in the benefits of competitive airport infrastructure with rigorous regulation.
“There is no one-size-fits-all solution. A broad range of ownership operating models exist that can meet a government’s strategic objectives without a transfer of control or ownership to the private sector. Globally, many of the most successful airports are operated as corporatised entities of governments.
“Governments need to evaluate the pros and cons of different models taking into account interests of all stakeholders, including airlines and customers. The most important thing is that airports meet the needs of customers and airport infrastructure users, at a fair price. And to do that, user consultation must be an integral part of the consideration process,” he said.
He said governments need to protect consumer interests by establishing robust regulatory safeguards to ensure cost efficiency in charges and improvements in investments and service levels.
