Airports Council International (ACI) has defended airport privatization as one “viable solution” to the capacity crunch, following airline criticism of the model.

During its general assembly in Brussels on June 19, ACI launched a report on airport privatization and funding, prepared jointly with Intervistas Consulting. This came after IATA issued government-guidance materials, based on the “the good, the bad and the ugly of airport privatizations,” at its own AGM earlier this month.

“ACI has a neutral position on airport ownership and does not suggest that airport privatization is the only suitable policy choice. There is, however, a global need to finance new airport infrastructure to meet future demand,” ACI World director general Angela Gittens said.

The need for airport investment is clear. Intervistas EVP and chief economist Mike Tretheway said passenger numbers are forecast to increase from 8.7 billion in 2018 to 22.3 billion by 2040. While there is already $335 billion investment planned, that still leaves a $78 billion gap, he said.

ACI insists there is “ample evidence” of the value of airport privatization. Over the last five years, the report estimates that airports with private-sector participation invested 14% more than publicly owned facilities and 12% more than the global average.

For privatization to be a success, ACI recommends that clear objectives and a legal framework are set before choosing the exact model, taking into account wider economic benefits. There must be scope for a reasonable return on investment and a long enough term to achieve it. ACI also recommends a two- to three-step bidding process.

“Individual governments are better placed to set the appropriate strategic objectives and to understand where the private sector is likely to add the most value for their airports. Any economic oversight, if necessary, should take into account the level of the investment and the need to generate a reasonable return proportionate to the level of risk taken by the private investor,” Gittens said.

Lufthansa CEO Carsten Spohr has been one of the harshest critics of airport privatization. “Privatization of an industry can only be a success when there is competition and the sort of competition that we need is missing in many cases in the airport sector,” Spohr told delegates at the ACI conference in Brussels.

Victoria Moores