> Outgoing baggage jumped out as a major trouble spot; Stanley went to investigate,
Does it really take an "engineer" to find a trouble-spot and fix it ? Why do you need a billion-dollar fund to grab engineering talent to do what the highly-paid leaders of, say, airports, are already supposed to be doing ? If they can't figure it out, isn't there a whole industry of consultancy firms that send "analysts" through your organization to do the same thing?
If this sector is so profitable, will it cause the same crisis that privatization of hospitals did to healthcare ? Say "Global Infrastructure Partners" expands and "buys" JFK, ATL, LAX, just like private healthcare bought all the hospitals. Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable. What's to stop them from turning this into the ultimate regulatory capture ?
> If this sector is so profitable, will it cause the same crisis that privatization of hospitals did to healthcare ? Say "Global Infrastructure Partners" expands and "buys" JFK, ATL, LAX, just like private healthcare bought all the hospitals. Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable. What's to stop them from turning this into the ultimate regulatory capture ?
Ironically, GIP owes its airport holdings to the UK government coming to that conclusion about the market power of the airport operator formerly known as the BAA, and forcing it to sell some of its airports. Its growth potential has depended on the success of lobbying efforts to allow it to expand LCY (was going through at the time they sold it) and ideally a second runway at Gatwick (still hoping for).
The politics might have more effect on its bottom line than buying in better logistics systems but it's probably less sexy an anecdote for an article. I'd definitely think they were better off hiring one really smart process guy as COO than contracting top tier consulting firms to throw dozens of graduates at the airport's operations issues though.
The "london additional runway" lobbying is extraordinary. I've seen huge billboard adverts about it up in Scotland, 400 miles away. There is clearly a lot riding on whether it ends up at Heathrow, Gatwick (less likely), Boris Island (even less likely now), or maybe doesn't get built at all due to environmental concerns.
Actually, I find it obscene that governments that can borrow at basically 2% per annum or less are not engaging in these projects, and instead leave 24% returns on the table for the private sector.
Call me a Keynesian all you want, but yes - the austerity stance in the last decade (after the GFC) (particularly in Europe, due to Germany, but also in the US) was a huge mistake.
Because governments aren't set up to do things efficiently and can never capture the 24% return. Going back to the 19th US where government ran and backed enterprises were outperformed over and over sector by sector by private enterprise. Not losing your job for bad investments is a bad incentive.
If macroeconomics was football, then austerity is like focusing the game on keeping the ball on the opponents side of the pitch but ignoring making goals altogether.
All good points. However, not every airport had the potential to provide the return on investment they were looking for to get them into multiple rounds of funding with this business model.
If you read the bios in the article, one of the investment banker guys got his start in Mergers and Acquisitions in the 80s, so it's the kind of approach they would take since it's what they knew and also what the people fronting them the money would be able to relate to. If he had gotten a start in consulting work instead, it would have been a different approach and a different story.
> Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable
Most popular destinations already have a choice of alternative options (EWR, LGA, BUR, SNA, ONT) and the ones that don't are big only because a major carrier decided to build a hub there (ATL, SLC). Carriers will not jump in with huge commitments until some long-term contracts are in place.
In Southern California, for instance, Santa Monica charges a landing fee, and nearby Van Nuys is suddenly the busiest general aviation airport in the nation.
Does it really take an "engineer" to find a trouble-spot and fix it ? Why do you need a billion-dollar fund to grab engineering talent to do what the highly-paid leaders of, say, airports, are already supposed to be doing ? If they can't figure it out, isn't there a whole industry of consultancy firms that send "analysts" through your organization to do the same thing?
If this sector is so profitable, will it cause the same crisis that privatization of hospitals did to healthcare ? Say "Global Infrastructure Partners" expands and "buys" JFK, ATL, LAX, just like private healthcare bought all the hospitals. Now they can start jacking up their landing fees (each year) until air travel becomes unaffordable. What's to stop them from turning this into the ultimate regulatory capture ?