Reconsider plans to privatize major airports, IATA urges Philippines

The world’s largest aviation industry group has urged the government to reconsider plans to privatize the Philippines’ major airports, citing disaster stories in other countries.

Allowing private companies to operate airports often leads to expensive fees that make facilities unattractive to customers, said the International Air Transport Association (IATA).

“I am not advocating for or against private participation. But there have been enough mistakes made when engaging the private sector in airport development. These should not be repeated,” IATA CEO Tony Tyler said in a statement.

“When governments work with private investors to develop infrastructure they must establish an effective economic and service-level regulatory framework to ensure that the national interest is well protected. That means ensuring that air connectivity is both cost-effective and efficient,” he added.

His statements come amid the regional trend of privatizing airports, with governments in Vietnam, Indonesia, South Korea and the Philippines all considering the participation of private investors in plans for the development of airport infrastructure.

The Korean government is considering private equity participation in Incheon airport, rated as one of the world’s leading air transport hubs.

Tyler cited the case of India’s Delhi Airport, where a high concession fee is making the airport expensive for airlines. Despite several appeals from the industry, the Airport Economic Regulatory Authority approved an increase in fees of 346 percent.

“Private sector participation was able to build a great hub facility. But the framework for economic regulation is not sufficiently supporting the long-term need for cost-efficient connectivity to fuel economic growth,” Tyler said.

He also noted that when the Hong Kong government looked at airport privatization in 2003, the conclusion was to keep the Hong Kong International Airport under full government ownership to ensure that it delivers maximum benefit to the Hong Kong economy.

Among the airports the Philippine government wants to eventually be operated by private companies are the Clark International Airport, envisioned as the country next major aviation hub, and the Mactan-Cebu International Airport in the Visayas.

The Godofredo P. Ramos Airport in Caticlan, the country’s nearest gateway to Boracay Island, is already being operated by a subsidiary of conglomerate San Miguel Corp.