Airports can be considered as important national resources of most countries in the world. The main responsibility of an airport is in transportation of people and goods and in internal and global business. They are where the nation’s aviation system connects with other modes of transportation and where state responsibility for managing and regulating air traffic operations intersects with the role of governments that own and operate most airports. However, most major airports are owned and operated by the private sectors. This is due to several reasons such as to improve efficiency and economic performance, be more competitive as well as to maximize the community’s return from the airport assets in which public enterprise found out to be less efficient in term of its production and management.
London Heathrow Airport is one of the major airports owned and operated by privatized company formerly known as British Airport Authority (BAA plc), now Heathrow Airport Holdings. Heathrow Airport Holdings owns and operates four major airports in the UK, including London Heathrow, Aberdeen, Glasgow and Southampton. However, in this case study, London Heathrow would be the writer’s main interest as to look at the effect of its privatization and find the possible impacts that it might have on the economy and society in general.
1.2 Definition of Airport Privatization
According to Airport Corporate Research Program’s Privatization Guidebook, Privatization refers to the shifting of governmental functions, responsibilities, control, and in some cases ownership, in whole or in part, to the private sponsors (ACRP, 2012, p.1). The term airport privatization is often understood to mean the transfer of an entire airport to private operation and/or ownership, but private sector involvement at airport can take many forms, these forms range form least to most private sector involvement. (ACRP, 2012, p.1)
Airport privatization is a policy that is picking up momentum by local governments. This momentum originates from the local government’s pressing need to invest in their infrastructure while undergoing tough financial times (Poole, 1994). As a result, local government sees that airport privatization as a financial model and a source of capital.
1.3 London Heathrow Airport under Heathrow Airport Holdings
London Heathrow (LHR) is the world’s busiest international airport and one of the hubs of world’s civil aviation. More than 67 million passengers travel through the airport annually on services offered by 90 airlines travelling to over 180 destinations in over 90 countries (“Heathrow’s History”, 2014) and carrying 1.3 million tons of cargo each year. It is located 32km to the west of Central London.
London Heathrow Airport, formerly known as London Airport, was officially opened in 1946. It was owned and operated under the British Airports Authority (BAA plc), when the company was created in 1966 and renamed the airport as Heathrow....