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IATA: Government should own major airports

IATA: Government should own major airports

If you ask me, I think major infrastructure projects should be owned by the government or for the continuous income generating ones like PLUS, should be owned by statutory funds like our EPF. The reason is simple, if we are talking about transportation infrastructure, it is for the people. This is not something which we could put a price to and say that because the ticket price is unable to cover the cost of construction, we should not proceed. Think a little further on what would have happened if there were no Petronas Twin Towers… KLCC properties would be nowhere near today’s level and so would other areas bordering KLCC for example. If KLIA was not pushed forward despite objections, we would not have LCCT and then KLIA 2 and the expansion of KLIA and we would still be using SUBANG airport as our international airport?! Now, let’s listen to what International Air Transport Association (IATA) is saying about building airports using private money.

Article in edgeprop.my here. IATA’s regional vice-president for Asia-Pacific Conrad Clifford said that based on IATA study showed that privatised airport does not deliver significant benefits to consumers. He said, “One of the biggest issues is that if you go for private financing, the market demands a much bigger return on its investment than the government does. Thus, airport charges necessarily have to be higher.”

He added, “We also tend to see bigger airports as state-owned assets and are of strategic significance to a country. In that case, we don’t think it is a good idea for it to be funded through private money just because infrastructure investment has become costly. If you are a commercial entity, your goal is to maximise profit. If you are a state-owned entity, your goal is to maximise benefits for the community at large. You have a different driver and that tends to mean that government ownership is better than private ownership. It is more responsive.”

With regards to the financing model for the new airports, Clifford said, “The government can go to the market and raise money by issuing bonds much more cheaply than a commercial entity. That will reflect back on the final cost of the (airport) project. Interestingly, we have had similar discussions with other airports around the region and in some cases, we have been involved in showing them how to raise money internationally.” Clifton also shared that some of the world’s best airports like Seoul’s Incheon airport, Singapore’s Changi Airport and Hong Kong International Airport’s are privately-held. Article in edgeprop.my here.

Let’s hope that the best decision would be made for all the upcoming future airports. The one which needs REAL expansion to cater for the next 20-30 years would be Penang and Kota Kinabalu. I am favouring a totally new one (huge new site with land for further expansion) instead of expanding current one to cater for another few million passengers for example. We only need to connect the airport to the city centre instead of building it nearby city centre… We need to remember that in order to facilitate ever more trade and tourism, international airports remain a key foundation. Rail can facilitate the movements within yeah, please do not equate rail to air… Happy following.

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Article written and edited by Charles. News article summarised by Dina Batrisyia.

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