All Clear for Takeoff: Evidence from Airports on the Effects of Infrastructure Privatization

Sabrina T. Howell, Yeejin Jang, Hyeik Kim and Michael Weisbach
Additional contact information
Sabrina T. Howell: New York University
Yeejin Jang: UNSW Sydney
Hyeik Kim: University of Alberta

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Infrastructure assets have undergone substantial privatization in recent decades. How do different types of owners target and manage these assets? And does the contract form—control rights (concession) vs. outright ownership (sale)—matter? We explore these questions in the context of global airports, which like other infrastructure assets have been privatized by private firms and private equity (PE) funds. Our central finding is that PE acquisitions bring marked improvements in airport performance along a rich array of dimensions such as passengers per flight, total passengers, number of routes, number of airlines, cancellations, and awards. Net income increases after PE acquisitions, which does not reflect lower costs or layoffs. In contrast, in the few cases where non-PE acquisitions bring some improvement, it appears to reflect targeting rather than operational changes. Overall, we find little evidence that privatization alone increases airport performance; instead, infrastructure funds improve performance both in privatization and subsequent acquisitions from non-PE private firms. These effects are largest when there is a competing airport nearby. Finally, we show that outright ownership rather than control rights alone is associated with the most improvement after privatization.

JEL-codes: G32 G38 H54 L32 R42 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-law, nep-reg and nep-tre
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Citations: View citations in EconPapers (1)

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https://dx.doi.org/10.2139/ssrn.4237006

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Working Paper: All Clear for Takeoff: Evidence from Airports on the Effects of Infrastructure Privatization (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2022-10

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