There are almost 10 billion aeroplane passenger journeys worldwide each year. Global passenger traffic reached 9.8 billion in 2025, up 3.7% on the year before and 6.5% above pre-pandemic levels, according to Airports Council International World’s latest Airport Traffic Dataset, covering 2817 airports across more than 180 countries. Behind that growth sits a shift in who owns the ground that travellers walk through, and new research says that shift matters more than governments have assumed.

Private capital has poured into supporting infrastructure: the pipes, roads, ports and terminals that are fundamental to airport operations. Assets under management in private infrastructure funds have more than quadrupled over the past decade to reach US$1.3 trillion as of mid-2024, according to Boston Consulting Group’s latest infrastructure strategy report.

Australian retirement savings have also been invested in airport assets. AustralianSuper alone carried a 12% infrastructure allocation worth US$31.5 billion at the end of 2025, and Australian super funds as a group hold roughly double the global median infrastructure allocation of pension investors elsewhere, according to data compiled by Infrastructure Investor. When BlackRock completed its $12.5 billion acquisition of Global Infrastructure Partners in 2024, it was betting that the same trend would continue to scale.

None of that capital cares whether an airport happens to be labelled “privatised”. What matters, according to a study in The Review of Financial Studies, is who is holding the keys once the sale goes through, and the answer is not what most privatisation debates assume.

Why airport ownership matters to more than just airlines

Governments around the world have been quietly handing over airports to private buyers for close to four decades, starting with the London Stock Exchange listing of the British Airports Authority in 1987. Australia followed with the sale of four airports in 1997 and 2002, each on leases running for around a hundred years. The pitch has always been the same: private owners run things more efficiently than public servants.

For example, when JPMorgan’s infrastructure fund took over Cairns Airport – the gateway to Australia’s Great Barrier Reef – the new owners moved quickly to add nonstop flights to major Asian cities. Tourist numbers to the region followed suit. It is the kind of decision people only notice after it works: for decades, the same airport sat under government or ordinary private ownership without that connectivity being built out.

Learn more: Finding passion in leadership: Sydney Airport CEO Scott Charlton

The research, All Clear for Takeoff: Evidence from Airports on the Effects of Infrastructure Privatisation, was led by Professor Sabrina Howell from Harvard Business School and co-authored by Associate Professor Yeejin Jang from UNSW Business School, Assistant Professor Hyeik Kim from the University of California, Riverside, and Professor Michael Weisbach of Ohio State University.

“The question motivating the study was whether transferring an airport to a private owner actually improves its operations and whether the kind of private owner makes a difference,” said A/Prof. Jang. “Airports offered an ideal laboratory for examining this question across countries because they perform broadly similar functions but have transitioned into different forms of ownership. The researchers also wanted to distinguish improvements made after an acquisition from a buyer’s ability to identify airports that were already poised to grow.”

The paper, and how it isolates cause from coincidence

The study, which included 2444 airports across 217 countries, drew on the largest hand-collected database of airport ownership assembled to date. The authors separated deals into three camps: government-owned, bought by an ordinary private firm, or bought by a private equity fund (all between 1996 and 2019) and subsequently identified 437 privatised airports.

"In the case of airports, private ownership can improve operational efficiency without an apparent deterioration in service quality"

YEEJIN JANG

One problem in this kind of research is determining whether better performance stems from what a new owner actually does, or simply from private equity funds being better at picking winners in the first place. The authors address this by zeroing in on government auctions in which a private equity bidder and an ordinary private bidder were both finalists for the same airport. Since both firms had invested heavily to reach the final round, both rated the airport highly by revealed preference. This comparison helps address the concern that private equity funds simply pick winners rather than create them after acquisition.

What changes once private equity takes the keys

The results are consistent across nearly every measure that matters to travellers or regulators. Domestic passengers carried per flight rose by around 15% under private equity ownership, largely because airlines are encouraged to use jets instead of smaller planes. International passenger numbers and flight counts climb by more than 70%, driven by more international routes and low-cost carriers gaining market share. Flight cancellations fall by 39%. None of this shows up under ordinary private ownership, where the same measures barely move and, in several cases, drift backwards.

Three changes explain the pattern: airports under private equity control expand terminal capacity, adjust the runway fees charged to airlines to reward larger aircraft, and chase international routes because international travellers spend more at the terminal. Net operating income rises by around 70% following a private equity takeover, and spending per passenger does not fall, which runs counter to the cost-cutting reputation often attached to the industry.

A/Prof. Jang said the findings contribute to the longstanding debate over whether privatising public infrastructure can improve efficiency without compromising broader social welfare. “In the case of airports, private ownership can improve operational efficiency without an apparent deterioration in service quality. However, private owners vary considerably in their ability and motivation to achieve these gains: highly leveraged private equity funds, whose managers are strongly incentivised to increase investment value, appear particularly motivated to improve airport operations,” said A/Prof. Jang.

Why the ordinary buyer falls short

The gap between private equity and other private buyers widens in countries where corruption is more common. Ordinary private acquirers deliver gains only where governance is strong. Where corruption is commonplace, their performance is flat or worse – a pattern the authors link to private benefit-taking rather than efficiency improvement.

Private equity funds show the opposite pattern, performing, if anything, better in more corrupt settings, consistent with the researchers’ view that their financial structure, heavily geared and tied to a share of profits, leaves little room for anyone to skim off the top. Many of the weaker-performing private buyers, the paper notes, were themselves spun out of former state-owned operators and appear to have carried some of that culture with them.

Subscribe to BusinessThink for the latest research, analysis and insights from UNSW Business School

“These differences matter when a government designs a sale or concession,” A/Prof. Jang explained. “Screening a bidder’s ownership structure, incentives, and capacity to invest may be as important as securing an attractive upfront price. In places with weaker public oversight, clear performance obligations and credible monitoring become especially valuable; the study’s country-level patterns do not mean that any one buyer is immune to governance risks.”

What this means for the next asset sale

For anyone advising on, bidding for, or regulating an infrastructure sale, the key takeaway is that “privatisation” is not a single thing. A government weighing up a sale needs to look past the headline transfer of ownership and ask who the buyer actually is and how they are paid.

The research also gives regulators a testable expectation: gains should show up in expanded routes, larger aircraft, and lower cancellation rates within a few years of a private equity handover. If they do not, something in the deal structure or the buyer’s incentives is probably off.

"Who owns an airport can shape what travellers and local economies gain from privatisation"

YEEJIN JANG

For institutional investors weighing the sector, including the Australian super funds increasing their exposure to infrastructure, the study highlights the importance of examining how an owner’s incentives, governance structure and capacity to invest translate into operational performance.

“The takeaway for governments is to assess the buyer’s incentives and investment plans alongside the sale price, and to monitor airline access and service quality. Who owns an airport can shape what travellers and local economies gain from privatisation,” A/Prof. Jang concluded.