Privatize Dulles and National Airports

The Trump administration is proposing to privatize two airports owned by the federal government in Virginia, Dulles and Reagan National. William Murray discussed some of the advantages in the Washington Post, and noted that Australia provides a good model for such reforms.

Policymakers can also look to Europe, which has embraced airport privatization since Margaret Thatcher privatized London’s Heathrow in 1987. Today half of Europe’s commercial airports are private, including the main airports in Antwerp, Birmingham, Brussels, Budapest, Copenhagen, Edinburgh, Glasgow, Lisbon, Liverpool, Naples, Rome, Vienna, and Zurich.

Some of the advantages can be:

• Self-financing without government subsidies.
• Higher productivity, more innovation, reduced delays, and better service.
• More competition between airlines and for gate space, to the benefit of passengers.
• Airport expansion as aviation demand rises with fewer political/bureaucratic/funding roadblocks.

Airports Council International says there is “no denying the tangible benefits” of market-based reforms in Europe's airport industry, including "significant volumes of investment in necessary infrastructure, higher service quality levels, and a commercial acumen which allows airport operators to diversify revenue streams and minimize the costs that users have to pay."

Privatizing D.C.’s airports would be back to the future. The main airport serving D.C. during the 1930s was the private Washington-Hoover Airport in Virginia. The main airports serving many U.S. cities at the time were private, including the airports in Los Angeles, Philadelphia, and Miami.

What happened to America’s private-sector commercial airports? In city after city, they were pushed aside by government airports, which benefited from a range of subsidies.

Today, Dulles and National are operated by the same government authority. For what reason? Economists of all political stripes believe that monopoly is inferior to competition with respect to efficiency, innovation, and customer service. So, at minimum, the Trump administration should push to split the two D.C. airports into separate entities and induce them to compete against each other.

Better yet, Dulles and National should be privatized separately, either by share offerings or sales to airport operating companies.

More on airport privatization here. More on the general benefits of privatization here.