The Government and Public goods

Read this first:
http://divisionoflabour.com/archives/005506.php

So the question is, should the government be in control of the airport as an owner. I say yes, mostly because of the importance of the public good itself. Airports are vital to the nation, though one might not ascertain that from the airline industry itself. The enormous overhead that airports take to build - the fact that the Minn-Minn airport is valued at $6bn should clue you in - represents a giant sunk cost that I'm not sure that the industry could accept. In 2006, via stock market bid valuation, Delta was worth at most $16bn. Suppose the airline industry then had to enable themselves to purchase even just a share of the airport - say a terminal - instead of essentially renting it as they currently do, and you have quite a sticky situation on your hands, as margins fall in the existing climate.

So it's probably unlikely that the industry would be capable of stomaching such a shift. But what if an investor (or group of investors as the case may be) took over the airport? Well, this is again an argument for the state controlled management. My guess is that MinnMinn doesn't have a whole lot more commercial airports in the area. Sacramento has two airports, but only one of them is commercial - the other only takes smaller-sized planes. So we understand that this would essentially constitute a monopoly. It's reasonable to continue in this frame: it would be easy for the controlling group to increase the fees for the use of the airport - either as a fee to the airline or directly to the consumer; either way would result in an increase price of flying from that particular airport.

What could also happen with a monopolistic situation? Who is contracting the air traffic controllers? As it is, the FAA does all this, but if the airport was handled by an exterior entity from the state, it opens the door for the existing people to leave or at the very least for lesser-qualified individuals in the future. The state does already have issues with air traffic controllers leaving and the new generation is stagnating in terms of population.

I strongly believe that the private sector/competition is capable of bearing out the most efficient solution for almost every market and situation. Transportation is not one of those situations. There's a reason we did not have a national highway system until the government decided to fund one. The airport network is the same. Further, monopolies and pseudo-monopolies would be catastrophic to an already suffering industry, and would introduce externalities that would be difficult for anyone to control.