Privatization of Uk Airports
utrecht university | Privatizing airports: Efficiency enhancing? | The case of the United Kingdom | Project group 6DJorn de Ruijter - 3813894David de Vos - 3805638Franceska Toader - 3726177Ruben Verdoorn - 3833259 | Supervisor: A. van den BergCourse: Institutional Economics (ECB2IE) | 28-10-2012 |
1 Introduction
The UK Government transferred the ownership of the British Airports Authority from the Government to the private sector on the first of April 1987. After 25 years, more than 50% of the British airports became privatized. There has been a lot of political debate about past privatizations and future plans of privatizing other airports (Ison et al., 2011). Today, most of the British airports are good examples of privatized firms operating in a regulated market. Some studies of public and private ownership suggest that privately owned firms can achieve higher levels of operating efficiency than state owned firms. Other research however confirms that a change to private ownership, especially where state regulation continues, may produce fewer economic benefits.
In this paper we try to research whether the privatization of airports leads or has led to an efficiency enhancing situation. The field of research of the paper will be Institutional Economics and we use the relevant theory on efficiency from that field. We will however not only focus on the theoretical differences between privately and publicly owned airports, but we will also test if the theory holds by analysing available relevant data on airport efficiency. We will consider the different ownership forms to be able to compare the different situations in terms of efficiency.
Lately, a lot of debating and research has been going on about whether to privatize airports or not. The relevance of our paper is therefore to contribute to the existing literature, providing new insights in the specific case of airport privatization in the UK. Besides that our paper can contribute to the debate
1 Introduction
The UK Government transferred the ownership of the British Airports Authority from the Government to the private sector on the first of April 1987. After 25 years, more than 50% of the British airports became privatized. There has been a lot of political debate about past privatizations and future plans of privatizing other airports (Ison et al., 2011). Today, most of the British airports are good examples of privatized firms operating in a regulated market. Some studies of public and private ownership suggest that privately owned firms can achieve higher levels of operating efficiency than state owned firms. Other research however confirms that a change to private ownership, especially where state regulation continues, may produce fewer economic benefits.
In this paper we try to research whether the privatization of airports leads or has led to an efficiency enhancing situation. The field of research of the paper will be Institutional Economics and we use the relevant theory on efficiency from that field. We will however not only focus on the theoretical differences between privately and publicly owned airports, but we will also test if the theory holds by analysing available relevant data on airport efficiency. We will consider the different ownership forms to be able to compare the different situations in terms of efficiency.
Lately, a lot of debating and research has been going on about whether to privatize airports or not. The relevance of our paper is therefore to contribute to the existing literature, providing new insights in the specific case of airport privatization in the UK. Besides that our paper can contribute to the debate
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