Management, be it of an airport or a utility, is generally more efficient in the hands of private enterprises aiming at minimizing waste and maximizing profits. In this regard, it is better to privatize Incheon International Airport, as the government plans to do in the near future, than to keep it as a state-owned corporation.
True, Incheon is one of the best managed airports in the world despite its current ownership. The airport, which was selected the best in the world for its service quality for the sixth consecutive year in February, had 300 billion won in profits last year. Given its outstanding performance, quite a few raise questions about the government’s privatization plan.
But chances are high that the airport will be even better managed when privatized. Moreover, the government needs to invest in infrastructure projects with the proceeds from the sale of a stake in the airport, including the expansion of the airport itself. It goes without saying that it needs to be privatized.
Nonetheless, the government will do well to shelve its privatization plan until after the presidential election scheduled for December next year. The reason is that debate on the issue is politically charged.
Rep. Hong Joon-pyo, leader of the ruling Grand National Party, turned the privatization plan into a serious point of political controversy when he recently proposed to sell a 49 percent stake to Korean individuals by means of public subscription. His proposal is reportedly supported by the government agencies concerned, including the presidential office.
But his proposal comes eight months ahead of the next parliamentary elections. Should his proposal be formally accepted by the government, it does not take genius to presume that the public offering would be set at a price well below its fair value to endear the ruling party to the electorate.
Moreover, the proposal to sell a 49 percent stake may appeal to opponents with a nationalistic mindset, who are campaigning against privatization for fear of the airport being controlled by foreign business concerns. But greater efficiency in management cannot be guaranteed when the government remains its majority shareholder.
Given all these problems concerning Hong’s proposal, the government has no reason to proceed with its privatization plan. Instead, it is called on to halt the debate on the issue until after the next presidential election. In the meantime, it may well conduct in-depth feasibilities on all the options available.
