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Airport Privatization in Latin America

Written by charleskopke · Filed Under Aeronautics News 

June 11, 2008

charleskopke

Market competition in the airport business grows at a steep rate due to the extraordinary changes this industry has been undergoing in the last few years. In turn, this requires the investment of large amounts of capital in order to meet travel demand. In sight of this, traditional airport management models become obsolete for governments troubled with ineffective airport financing. From the early eighties there has been an evolution in the traditional airport management model, so that nowadays governments no longer observe airports as part of the general infrastructure, but rather as impending profit making enterprises. Advancement in operating effectiveness, a more consumer oriented approach as a consequence of new management styles and marketing ability, as well as superior investment judgment, are just some of the main economic advantages privatization has to offer. Yet not everything is ship-shaped and above board when it comes to privatization. A fair deal lies on the line as risks have to be taken and management from official authorities has to be cautious and straightforward. Decisions cannot be taken briskly and appropriate policies have to be pondered in order to uphold the public interest. For Latin America, this has mostly meant the introduction of concession contracts in the airport industry. These allow the government to maintain tenure of airport resources whilst gaining from the investment of private supporter.

Privatization processes experienced by countries such as Argentina, Bolivia, Chile, Dominican Republic and Mexico offer a framework on the resultant benefits and drawbacks for those involved in this industry, as well as for travelers. Considering this, what do you think these benefits and drawbacks have been? Taking into account controversial licitation processes as contentious as the one recently experienced in Colombia, what is your opinion on the way these bids have been carried out in Latin America?

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