By Yoon Ja-young
Staff Reporter
A ranking official at the Ministry of Strategy and Finance said that selling a stake in government-owned international airports was now a global trend. There is, however, increasing doubt over why Incheon International Airport, already in good shape in terms of profitability and services, should be privatized.
``Though Incheon International Airport ranked top in terms of services, it has more room to develop by improving effectiveness in management,'' said Deputy Minister for Fiscal Affairs Lee Soo-won in a radio interview, Wednesday.
The government announced earlier this month that it would sell a 49 percent stake in the state-owned international airport.
``Despite its geographical strength of being located between Japan and China, Incheon International Airport has a low transfer rate of 12 percent, far from its aim of becoming a hub airport in East Asia,'' Lee said, adding that a strategic tie-up with a foreign airport operator was necessary.
However, there have been strong arguments against the government's privatization plan. Critics say that Incheon International Airport is too good to be privatized.
While most state-run firms facing privatization are suffering from poor profitability and efficiency, the international airport recorded over 200 billion won in net profit last year, and the operating profit rate is nearly 50 percent. It recorded near 1 trillion won in total sales, but the number of staff members hovers below 1,000, which means there is little need to slim down more.
Incheon International Airport is already competitive, being selected as the best airport in terms of services for three consecutive years by the Airport Council International.
Regarding the low transfer rate, the airport union points out that it has more to do with the government policy. ``Singapore and Hong Kong, which have a high transfer ratio, have been developed as trade hubs from hundreds of years ago,'' said a spokesperson at the Incheon International Airport Labor Union. He said the government is intentionally omitting the fact that Incheon Airport is in the world's top class in cargo transfers. ``From the initial stage, Incheon airport was focusing on becoming a logistics hub in East Asia and it succeeded.''
He also doubted that selling a stake to a foreign airport operator would enhance competitiveness. ``Beijing sold part of its stake to a French airport operator as it needed money ahead of the Olympics, but the French operating company sold off its stake last year after reaping over 200 percent investment return. The current stakeholder in the airport has nothing to do with airport operation,'' the spokesperson said.
He said Britain, which privatized airports under Thatcher, is witnessing mounting problems. Heathrow Airport in London, for example, fell to below 100th in service evaluation from 45th after privatization. Opponents of the plan fear that privatization will only result in the raising of service fees instead of enhanced efficiency. They also point out that it isn't appropriate to privatize an airport that is monopolizing the market.
As the government pushes for the controversial plan, it is failing to present convincing reasons. A number of media even reported recently that the administration is trying to favor Macquarie, for whom President Lee Myung-bak's nephew works, in the airport privatization scheme.