ABSTRACT
SriLankan Airlines posted its first net profit in 25 years in the year ended March 31, 2004'. The airline is majority-owned by the state and the reported profit was smaller than the loss recorded the previous year. The history of Olympic, the publicly-owned Greek airline that for it seems like forever successfully avoided generating profits is another example mentioned when talking about the evils of public ownership of airlines. There were, of course, valid reasons why so many countries had publicly owned airlines. Standard public policy says that there are a number of services the private sector cannot or should not provide. The belief is that public ownership is by itself inefficient and does not have the proper incentive structure. The idea of privatizing the provision, although not necessarily the payment, of public services has been around for quite some time. Privatization of public services is being implemented worldwide in education, culture, recreation, medical emergency handling, even in running prisons.
