Hold that plane! : Airport innovation driven by privatisation

The airport business is more competitive with substantial increased returns and performance. If we think of the airport as an organisation initially designed to deliver value for key stakeholders and their customers, the privatisation of an airport generates a radical change in the overall business model for the airport owner and the various stakeholders involved in the operation of the airport. How and where the individual firms involved in delivering airport services create and capture value may be markedly different in the newly privatised airport operations. The influence of privatisation reforms and the drive towards increasing profit-orientation on key stakeholder groups of Sydney airport has generated significant new tensions between these stakeholders and their roles in improving overall airport innovation and performance. It is proposed that Sydney airport has re-orientated itself to meet the demands of stakeholders, including consumers, investors, suppliers and regulators. It is argued that value captured from privatized airport operations at Sydney airport has resulted in increased profits per arriving passenger, departing passengers and airline movements. Using feedback from key stakeholders, research reported in this paper aims to provide insight into the generally accepted view that airport privatisation has led to an improvement in airport performance. Before and after (privatisation) analysis of the total airport operations and its key individual firm operations against Chesborough’s Business Model Framework provides a useful insight into the impact of privatisation on business model innovation.The findings were derived using ‘Leximancer’ qualitative research data mining software to undertake initial analysis of stakeholder interview data. The key driver behind this study was the need expressed in the literature for more studies on the Australian privatisation experience (in particular, the recent inquiry by the Australian Productivity Commissions’ review of price regulation of airport services post-privatisation).