LGT4012 Airline Management Report: Privatization and IATA Analysis

This report examines the impact of airport privatization on the airline industry, focusing on the perspectives of the International Air Transport Association (IATA). It discusses the potential benefits of privatization, such as increased efficiency and investment, while also highlighting the drawbacks, including increased fares and reduced service availability. The report analyzes whether IATA is correct in its concerns about airport privatization leading to higher prices for airport infrastructure services. It provides an overview of the privatization process, including various forms of cooperation between public and private sectors, and presents a critical analysis of the outcomes, including the impact on ticket prices and customer service. References to relevant academic sources are included to support the analysis.

Running head: - AIRLINE MANAGEMENT
AIRLINE MANAGEMENT
Name of the Student
Name of the University
Author Note

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Table of Contents
1. Question-1..............................................................................................................................2
2. References..............................................................................................................................5

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1. Question-1
Do you believe that IATA is right, and that airport privatization will likely lead to higher
prices for airport infrastructure services?
The International Air Transport Association (IATA) had organized the 74th Annual
General Meeting (AGM) and had urged all the governments to take cautious steps for
considering the process of privatizing the airports within all the cities (Rolim, Bettini &
Oliveira, 2016). The resolution that had passed had the primary inclusion of the IATA
members to call upon the governments and to prioritize the long-term social as well as
economic benefits that are delivered by the airport on a regular basis. This was carried out
before the short-term financial gains that had been provided by the poor procedure of
privatization.
Airport privatization for all the airports refer to the cooperation that is carried out
between the public and the private sectors that has the inclusion of the activities such as the
likes of operating, renovating, maintaining as well as improving all the facilities contained
within an airport (Czerny & Lang, 2019). This procedure of airport privatization includes
various forms of cooperation starting from the simplest service to long-term sales or might as
well be leases.
The IATA had stated the following benefits that can be achieved by privatizing the
airports in the major cities of the world,
i) Increase in efficiency of the services that might make them cheaper as well as
better in terms of prosperity for the airline customers (Kawasaki, 2017).
ii) Attraction to larger investors for investing their revenue into the airlines with an
expectation to generate greater profits.

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iii) Benefits to the economy of the country along with the community the humans are
surviving in.
All of the above-mentioned benefits had been the primary expectations when the
governments of the country in collaboration with the IATA had passed the procedure of
airport privatization. However, it has been visibly identified that some of the expectations
that the fares would be lowering down and availability of tickets for travelling would become
available in bundle has turned out to be false.
The procedure of airport privatization has allowed various retailers to book a place for
their offline stores within the airports that provide the waiting or the travelling customers
with various forms of consumables or other forms of commodities such as gifts (Tatalović,
Bajić & Šupuković, 2017). The extra charges for the electricity and the taxes of these shops
have led to the increase of the fare prices for the travellers.
Figure-1: Privatized Airports
(Source- Tatalović, Bajić & Šupuković, 2017)

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Hence, the following disadvantages have been identified to have occurred as the end
result for the airline privatization,
i) Charges for the tickets and the other relative services offered by the airlines have
increased.
ii) The operating efficiencies have not been up to the mark as it had been expected
previously before the privatization procedure had been undertaken.
iii) With the various services that had been offered to the customers, the availability
of tickets and the relative accommodation of the customer have become difficult.
All of the above failed scenarios have led to the believe that the airline privatization
was not an impactful step, which have led to the increase of fares for the customers leading to
consequences such as customer backing out from using the services of the airline industry.

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2. References
Czerny, A., & Lang, H. (2019). Privatization and Deregulation of the Airline
Industry. Available at SSRN 3469449.
Kawasaki, A. (2017). Airport Privatization Competition Including Domestic Airline
Markets. Review of Urban & Regional Development Studies, 29(1), 2-17.
Rolim, P. S., Bettini, H. F., & Oliveira, A. V. (2016). Estimating the impact of airport
privatization on airline demand: A regression-based event study. Journal of Air
Transport Management, 54, 31-41.
Tatalović, M., Bajić, J., & Šupuković, V. (2017). Air Transport Privatization Trends. EMC
REVIEW-ČASOPIS ZA EKONOMIJU, 14(2).