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Market liberalization at airports: time to take it down a notch?

17 Oct 2019
The free market is something we cherish. But in some cases, the urge to liberalize the market has led to catch-22 issues.

At large airports, most activities – from baggage handling to cleaning services – are fully liberalized. Independent companies, such as handlers, take on these activities and define their own ways of working and performance standards. The upside is that the work is done in a very (cost-)efficient manner, as the parties involved compete with each other and therefore focus on expenses and benefits. The downside, however, is that all these links in the chain operate as autonomous units, impacting all-important areas such as security, working conditions, sustainability, and capacity – each of which impacts the performance of the airport as a whole.

The consequences are felt among travelers, who believe the airport should step up, take control, and implement the necessary measures. But in reality, the airport’s hands are tied, as the various parties that provide services operate independently and are not under direct contract. Yet if you ask them, most would, in fact, welcome a little coordination – which the airport isn't allowed to offer under the European aviation directives or competition laws. Like I said: a catch 22.

Stalemate situation: lack of an overarching decision-maker

Less-than-optimal working conditions, security issues, severe capacity restrictions, a sustainability approach that leaves room for improvement: the free-market system causes a plethora of problems that impact the airport’s total performance. Examples include long queues at check-in counters during summer, delays in aircraft handling, and fuel supply issues, which the airport can’t do anything about because each of these matters is handled by external parties.

In addition, legal frameworks impede innovation. For example, a new technology which enables the use of autonomous vehicles to handle baggage more efficiently is about to be introduced. Now, here's the problem: the airport owns the central baggage sorting infrastructure, whereas external parties handle baggage next to the aircraft – a stalemate situation that makes it impossible to introduce this new technology, simply because there's no clear decision-maker. The same will apply when, at some point in the (near) future, robots will be able to take over baggage handling: the option can't be utilized, for no one is truly authorized to adopt such new technologies in the end-to-end process.

For the same reason, the airport can’t use the latest handling equipment (which may cause security issues) and electrical vehicles (which is why feasible sustainability goals fail to be met).

Renewed balance: considering the sum of all parts

In view of these problems, it wouldn't be a bad idea to reconsider the legal frameworks that currently dominate the ecosystem at airports. After all, the above issues scream for some coordination. I'm not saying we need to reduce market forces, but a renewed balance is much needed.

Governments should take a step back and consider if they can realize some form of central coordination while leaving the system's foundation intact. Competition can absolutely continue to exist, but everyone might benefit if it's taken down a notch. In the end, an airport's success depends on the sum of all parts – the whole that arises from the chain of individual links that work together in a place where national interest is paramount. So, wouldn't it only be logical for one party to assume a little control and act as the glue that holds everything together?

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