02-11-2016, 03:16 PM
1463574062-1903791SM.pdf (Size: 208.44 KB / Downloads: 35)
The problems of airports in the 21st century is more actual than ever before because the market has noticed an enormous increase
over the recent years. The characteristics of airport is based on the theory of natural monopoly that is why this paper is is based on the
theoretical knowledge. We analyze the positives and negatives of direct foreign investments and the effects of the investment incentives in
the operation of the airports. We are definying the forms of privatization of airports and are analyzing their advantages and disadvantages.
We are dealing with the types of airport leasing and are analyzing their advantages and disadvantages. Consequently we are trying to find
relevant facts from the practice about the privatization and airport leasing in the world and in Slovakia. The aim of the paper was to find a
well- founded standpoint to these questions which would be understandable for the public.
INTRODUCTION
In Slovakia, privatization and airport leasing
are very specific problems which has not so far bee
dealed with much attention, except few cases. In the
world economics, however, air transport is of
concern to economical and political interests of
every state, as an important mover of globalized
power. It has significant quantitative and qualitative
impacts on tourism, foreign trade, direct foreign
investments, economic structure and productivity
on national and international level.
Considering the multidisciplinary character,
globalism and the necessity of cooperation of many
subjects and the essential high profesionality of
employees, airports are areas of the most complex
economic activities. Therefore, its further
development is driving force of innovation in many
other fields, too. The state ownership in the air
transport of the developed countries is declining to
private proprietary and the state is, by the
increasing measure, concerning only the regulatory
functions. Deliberately the very essential
contribution to the international cooperation and
tourism the investments for the air companies do
not have by no means such economical impact as it
is possible to achieve in other fields. The
motivation of the investors is often rather the effort
to take part in the attractive projects than to gain
the consistent profit.
The economic development, the increase of
the direct foreign investments and the development
of airports are bearing on each other, so it is not
possible to say which of these factors is the
generator of others.
2 CHARACTERISTICS OF AIRPORTDEFINITION
OF TERMS
The airport is modified engineeringtransport
building provided the air transport. It is
divided on airside which serves to secure the start,
the landing, the rolling and the parking of the airport and the economic- social section ( landside)-
accommodating objects, store, objects of health
care, objects for cultural activities of people at the
airport, the parkings.[11]
The airport contains the elements of modern
transport infrastructure. By the essential way, we
divide it into the services closely connected to the
maintenance of air transport means, transport of
people (air services) and the additional activities
realized in favour of their needs at the airport (noair
services).[12]
2.1 The economics of airport
The economics of an airport is difficult
system of financial flows between the aiport
companies and the airport, between the supplying
subjects and the final customer participating in the
process to be effectively managed by the company
any with the aim of making the profit. Good
economical environment provides the main
intention of airport:
- high security of air transport,
- high quality of provided services for the air
transporter and for the public,
- production of economic profit of the airport
company. [8]
2.2 The natural monopoly and the regulation of
charges policy
The aiports are classical examples of natural
monopoly. The insufficiency of competition leads
to the „fears about the potential misuse of the trade
power“ because the investment costs to build the
airport are very high.[6]
The existence of regulation at the airports is
very important, particularly when the airports are
privatized. It is to prevent from the uncontrollable
growth of the charges from the part of the private
monopoly. On the other hand, the rules of
regulation provide to investors the reliability of the legal ambit. Among the basic regulative
mechanisms belong:
- the regulation on the basis of the rate of return,
- the regulation on the basis of the price ceiling,
- the regulation of the expenses.[8]
The problems of privatization and the
regulation of natural monopolies resonate in the
slovak society from the beginning of the
transformation process and it is the subject of
significant political and economical discussions.
The dominant influence of the state on the economy
of monopolies is expressed by the execution of the
proprietary laws in these companies and by the
regulation of their activities. The combination of
executive and regulative activity leads to the
inefficient functioning of the natural monopolies
and this has the negative impact on economic
progress.[14]
3 DIRECT FOREIGN INVESTMENTS IN THE
AIRPORT SERVICE
The direct foreign imvestments is one of the
realization form of long-tem international capital
movement. These investments provide the investors
the long- term active participation on the control of
company abroad, by means of the proprietary right.
The direct foreign investment constitutes the
category of international investments which
expresses the intention of subject, who is the
resident of one economics (direct investor), to gain
the permanent share with the corporate in other
economics ( company of direct investment). The
permanent share expresses the existence of longterm
relation between the direct investor and the
company of direct investment and the significant
degree of the influence for his management.[2]
3.1 The advantage od DFI
The direct foreign investments allows the
transfer of technologies, namely the new method of
capital input that cannot achieve through the
medium of foreign investments and the trade with
goods and services, might promote the conomic
competition in the home market, they contribute to
the development of human capital in the host
country, the profits generated by the direct foreign
investments contribute to the fiscal profits of host
country, the stimulation of the infrastructure
development, to toughen the new manager methods
and experiences, the entrance of new production
technologies, the growth of export, the amelioration
of the payment balance, the growth of the company
competitiveness and competitive, the regional
development.
The disadvantages of DFI
The main disadvantages of DFI: breach of
the local market, disconnection on the local
economics, additional expenses on investments
stimulus, the quality of investment stimulus- unfair
competition, domination of foreign proprietors in
the key sectors, the possibility of sudden leave with
the all impacts, aversion from the local
inhabitants.[13].
The effects include the height of
investments, the number of newly-formed working
place, structural characteristics, export power,
connection with the local companies and the
impacts of investments for local public and
companies.[1]
3.3 Investment incentives
The investment incentives are one of the
factors influencing the investors in deciding about
the investment. Investment incentives are
appropriate tool of economic policy that contributes
to the growth of the wealth of state.[1]
The governments uses three main categories
of investments stimuli to lure on FDI and to use
their positive contributions:
- financial incentives - direct grants and loans
with the reduced bank rate,
- fiscal incentives - tax holidays and reduced
scheduled charges,
- other incentives - supported infrastructure or
services, market preferencies and regulation
easement inclusive of the exemption of labour
or enviromental laws.[6]
4 PRIVATIZATION OF AIRPORTS
Essentially, there exists three possible
variants of proprietorship and long-term lease,
which are used around the world:
- airport in major state/social ownership,
- airport in private ownership,
- airport with the stake of social and private
ownership, airport lease or some of his parts.
[5]
Privatization is the transformation process of
social onwership to the private. It is the tool to gain
investment means for the infrastructure
development, but it has not direct connection with the development of transport, growth of the amount
of passengers and with the opening of new air lines.
Through the definition of privatization,
namely the privatization of airport we understand
large scale of forms ( from the partial privatization
to the absolute privatization fo subjects.
Furthermore, the key problem which we need to
emphasize is between the privatization of subject
that is owner of the airport and privatization of
subject of the management operation at the
airport.[5]
4.1 Forms of airport privatization
The franchising operation to the private sector
(consortium, operator, financier and developer)
means to carry on and develop airport for the
limited period of validity of trading licence at
intervals 20-50 years.
The franchising operation to the private subject
means to develop and carry on the system of several
airports on behalf of one or several strategical
investors, or on behalf of general public as the
actionary of defined trading licence.
Sale of shares in the inland airport to the private
sector ( completely or with the cooperation of the
government) that the authority become the subject
in the private sector.
The franchising operation to the private sector is
the development and operation of equipment in the
propriety of state ( personal terminal, cargo center)
until the limited period after which the equipment
can be return to the state.[5]
4.2 Advantages of airport privatization
From the point of view of public sector, the
airport privatization has next advantages:
- it mildens the budget restrictions,
- it increases the actiovita of airport operation as
the company and the financial motivation to
provide the best services for the companies,
- it redirects the augmentation of the investment
expenses- it is needed more investments to the
infrastructure for the maintenance of services
level so the utilization of private fonds leads to
the improvement and it is becoming more
attractiv,
- It increases the possibility of airports to support
local economic development. So we can so
expect that the providers of airports will
cooperate with the local tourism to attract more
passengers.
Privatization increases the ability to gain the
capital for the development of the infrastructure
projects of airport. Furthermore, privatization can
be the mechanism for the generation of incomes for
the local, state or international governments.
Privatization is also generally connected with the
improvements and to make the operation more
effective.[3]
4.3 Disadvantages of privatization
The disadvantages of privatization are:
- contradictory aims between the public assets
and the profit of energies,
- narutal monopoly, corruption, leack of
transparency and responsibility,
- potential deletion in the essential services.[3]
As the biggest risks of privatization by the
means of public competition, we can considers
these:
- minor interest assigned to privatization will not
be attractive for the foreign investors,
- ungovernableness of public competition
(advertise, control and evaluation) can invoke
bad image between the investors,
- succumbing to the political and populist
tension, whereby there is a threat of spending
the income from the privatization to the
liquidation of common expenses,
- absension of suitably adjusted regulative range
can evocate disfavourable impacts on
economics in form of the increase of prices
etc.[14]
4.4 SWOT analysis of airport privatization
Beside the evaluation of the internal field,
the stronger sides gently prevail over the weaker
ones. The strong side of the privatization is the
improvement in the operation activity and the
implementation of new controlling styles and
marketing abilities may lead to the increase of
activity of airport aoperation and to the increase of
possibilities of airports to support local economic
development. Beside the evaluation of external
field, according to our analysis, the threats prevail
over the opportunities. The augmentation of the tax
avoidance, the reduction of tax income for the state
cashbox, succumbing to the political and populistic
tension may contribute to th threats, so the risk of income consumption from the privatization on
compensation of ordinary expenses is high.
The use of privatization by the private sector
may have as the result the exploitation form the
side of rich, the increase of prices and the dismissal
to decrease the production costs.
AIRPORT PRIVATIZATION
Airport leasing is the relationship ( between
the provider, renter and charterer) beside which
the charterer, on the basis of the contract, pay to
the renter (proprietor of the equipment), during
the negotiated period, established lease payments
as the compensation for the free utilization of the
subject of rent. The renter remains the owner, after the payment of the last ante, the ownership
right overpass, under the negotiated conditions, to
the charterer. [14]
We differentiate two main essential types of
leasing: operation lease, financial lease that we
can further divide into the direct , indirect and
leverage.
The lease of airport may generally divide into
these main categories:
- air lease and non air lease,
- long term lease,
- lease done by the operator,
- lease of specialized air services of the the
operator,
- lease of hangar,
- sublease,
- air lease. [15]
5.1 Advantages of lease
The advantages of lease are:
- the possibility to use the possesion without the
necessity of impulsive spending of all the
financial means for the investment, that allows
to put the investment more quickly into
operation, technologically innovate and to
increase the competitiveness of the company,
- lease financing is flexible and it is considerated
as more flexible than in the relations to the
internal sources, loan or the obligation,
- lease financing permits the charterer to include
the rent ante to the expenses, thereby to
decrease the tax base,
- the possibility to use the property without the
necessity to risk connected with his provision
and owning,
- possibility to provide the property for the lower
price because the leasing companies often have
signed contract about the cooperation with
several supply, insurance and forwarding
companies, so they gain various rebates,
- leasing company gains form the banks mostly
cheaper loans than small and moderate
entrepreneur,
- besides the fixed payment, the leasing
company takes over from the charterer the
inflated risk.