The privatisation of Australia's airports

When the Federal Airports Corporation (FAC) was formed in 1988, administration of Australia's major airports passed from a Government department to a corporatised entity. The FAC improved the performance of the airports sector and it broadened the revenue base through commercial and property development. By 1994, however, policy thinking shifted in favour of privatisation. So far, the Government has sold 17 of the FAC's 22 airports and it has received US$2.6 billion (1998/99 values). Four of the remaining airports are in the Sydney region where there are on-going debates about an appropriate site for a second major airport. The paper describes the sales processes and presents details about the new owners, the commitments they have entered into, and the regulatory system that has been established for the post-privatisation era. Price-capping arrangements have been put into place for the major airports, but Australia also introduced legislation to ensure there is competitive access to essential infrastructure. It is too early to assess the performance of the new owners and to see how the interaction between access regulation and price capping is managed, but this paper documents the pre-privatisation situation to assist future researchers.