Airport Privatization

Performance-based Compensation. Just as private contractors are paid based on results, they can base employee compensation on performance. Contractors can pay bonuses for exceptional performance and give merit increases alone rather than longevity-based pay increments. This elicits greater productivity and effectiveness from staff. Management Expertise. Contractors develop expertise to compete effectively. They hire well-known experts and develop management structures geared toward continuous improvements in performance. Flexibility. Private contractors have the flexibility to respond quickly to changing program requirements or evolving needs of organizations. They can acquire new technology, obtain new equipment, reorganize offices, and/or adjust staffing configurations without the encumbrances of slow-moving public civil service or procurement systems. Most importantly, if they can increase their revenue by investing in more staff and other resources, they have the flexibility to do so without the artificial constraints of limits found within the government bureaucracies. Technology. Because of purchasing power and a conduit to leading edge technology, private companies can obtain and adapt technology to improve productivity and track performance in ways that the public sector is typically not able to match. Governments rarely act quickly enough to develop or use leading edge technology. Customer Service. Private contractors tend to place a strong emphasis on customer service because, for competitive reasons, they must be acutely sensitive to their reputations in the communities that they serve. They also bring a level of expertise in improving customer service that may not be as well developed in the public sector. Cost-effectiveness. Numerous studies have documented the cost savings agencies achieve from outsourcing services to private organizations. For full-service private airports, an initial investment may be required to transition to privatization, but a private contractor will tend to reduce the costs of operations.