ABSTRACT
This chapter focuses on the operational infrastructure of the industiy, namely, air traffic control and airports. It talks about an economic analysis of airport ownership and the likely outcomes when public or private ownership is considered. The chapter discusses the appropriate ownership of airports and the use of pricing mechanisms to allocate and improve the scarce resources at the airports. Many economists would maintain that private ownership of the airports would provide a better set of incentives for the long-term viability of the industry. The financial company, Macquarie, has created a privatized airports mutual fund for global investors. The techniques used to privatize airports vary in terms of the scope of responsibility and, in some cases, the degree of ownership transferred to the private sector. In many countries around the world, except the United States, governments own and operate aviation infrastructure including gates, assigning them dynamically to airlines as needed.
