Sell airlines: buy airports ~ Attributed to Rigas Doganis
Recently, a distinguished colleague in the airport industry brought to my attention the fact that there are certain airlines in the world that own airports. This brought to my mind my own past experience in ownership and control in the aviation industry.
There is a deceptively simple question which conceals within it a complex architecture of aviation economics, competition law, public administration and international air law: Can an airline own an airport? The short answer is yes, in principle, although complete ownership of a major international airport by an airline is highly unusual. The more important question, however, is whether an airline can exercise effective control over an airport without legally owning it. That question assumes particular significance at a time when the traditional institutional boundaries between airlines, airports, terminal operators, infrastructure investors and air navigation service providers are becoming increasingly fluid.
The distinction between ownership and control is therefore fundamental. Ownership concerns legal title, shares and proprietary rights. Control concerns the capacity to determine outcomes. An airline may own an airport, or a part of it, without necessarily exercising complete operational control. Conversely, an airline may possess no legal title to the airport and yet exercise considerable influence over its development, terminal configuration, allocation of gates, passenger-processing arrangements, investment priorities or commercial strategy. In aviation, this distinction is especially important because an airport is not merely commercial property. It is part of the infrastructure through which the sovereign responsibility of a State for civil aviation is translated into operational reality.
Can an Airline Own an Airport?
There is no general rule of international air law which says that an airline is prohibited from owning an airport. An airport, in the ordinary sense, is capable of being owned by a private corporation, and there is no inherent legal incompatibility in that corporation being an airline. What matters is the regulatory environment in which the ownership is exercised.
The practical reality, however, is that sole ownership of a major airport by an airline is rare. Modern airport ownership tends to be divided among governments, municipalities, airport authorities, infrastructure companies, institutional investors and concessionaires. Where airlines participate, they more commonly own or operate a terminal, possess an interest in an airport company, enter into long-term concessions or acquire other forms of economic participation.
The distinction is significant. Lufthansa, for example, does not own Munich Airport. Flughafen München GmbH operates the airport. Lufthansa nevertheless holds a 40 per cent interest in the company operating Terminal 2, while Munich Airport holds 60 per cent. Terminal 2 is therefore an important example of airline participation in airport infrastructure without airline ownership of the airport as a whole. Munich Airport and Lufthansa have continued to develop the terminal as a major component of the airport’s future capacity. The arrangement illustrates how airline participation may extend well beyond the conventional relationship between airline and airport user.
Other historical examples demonstrate that this phenomenon is not unique. Qantas has had ownership interests associated with terminal facilities at major Australian airports, while at New York’s John F. Kennedy International Airport airlines have participated in the development and operation of terminal facilities. Such arrangements demonstrate that airline participation in airport infrastructure is not inherently anomalous.
Nor is airline participation necessarily undesirable. Indeed, it can produce important benefits. An airline that is economically invested in a terminal has a direct incentive to improve passenger flow, transfer efficiency, baggage handling and connectivity. It may be prepared to commit capital to infrastructure because the benefits will be reflected in its network. Airline participation can also align investment decisions with actual operational requirements.
The difficulty arises when participation becomes dominance, and dominance becomes effective control.
An airline may therefore own an airport in law, but that does not mean that it may operate that airport as though it were an ordinary private commercial asset, free from public regulation or international obligations. An airport serving international traffic occupies a special position. It is simultaneously a commercial enterprise, a transport facility, a border-crossing point, a safety environment and an element of the international civil aviation system.
The more interesting question consequently becomes not merely whether an airline can own an airport, but whether the airline, through ownership or other arrangements, can exercise control inconsistent with the rights of competing airlines and the obligations of the State.
Ownership Is Not the Same as Control
The airport of the twenty-first century is better understood as a network than as a single piece of real estate. The runway connects to the taxiway; the taxiway connects to the apron; the apron connects to the terminal; the terminal connects to customs, immigration, security, baggage and ground transportation; and all of these are connected to the airspace through the air traffic management system.
The airline therefore operates within an ecosystem in which the control of one component can affect the functioning of others.
This is the point at which the language of ownership becomes insufficient. The crucial inquiry becomes: who decides?
Who determines which airline receives which gate? Who determines whether a terminal is expanded? Who determines the commercial terms under which competing airlines gain access? Who controls the allocation of scarce infrastructure? Who determines which facilities are modernized first? Who influences the airport’s capital expenditure programme? Who has the practical ability to delay, facilitate or frustrate a competitor’s access?
These questions take us directly into the territory of competition.
Legal control is relatively easy to identify. It may arise from ownership of shares, voting rights, concession agreements or contractual management powers. Effective control is more elusive. It concerns the ability to determine outcomes. A minority shareholder may possess veto rights over strategic decisions. A tenant may have exclusive rights to a terminal. An airline may have sufficient traffic volume to become indispensable to the airport’s financial model. A contractual arrangement may give the airline influence over investment decisions disproportionate to its formal shareholding.
The law must therefore ask not merely who owns the airport but who possesses the capacity to shape its behaviour.
This is particularly important where the entity exercising substantial influence over the airport is an airline. An airline’s legitimate commercial interest is to secure capacity, efficient facilities, attractive schedules, convenient gates and reliable connections for its passengers. The airport operator’s corresponding responsibility is broader. It must accommodate the interests of multiple users, comply with national regulation, facilitate international traffic, maintain safety and security, and ensure that the airport remains an open gateway rather than becoming, in effect, an extension of one airline’s commercial empire.
Suppose, therefore, that Airline A owns 40 per cent of a terminal operating company and is the dominant airline at the airport. Airline B, a competing international carrier, requests access to equivalent facilities. Airline A cannot simply say, “You cannot use this terminal because we own it.” The airport is not necessarily Airline A’s private domain. Its operation exists within a regulatory and international legal framework.
The more difficult case arises where Airline A does not openly discriminate but exercises influence indirectly. Its preferred investment programme may favour facilities disproportionately useful to its own network. Its contractual arrangements may make competing access more expensive. Its control over gates may result in less attractive operating times for competitors. Its influence over terminal design may create structural advantages for its own transfer traffic.
None of these acts necessarily amounts, on its face, to a denial of access. Yet collectively they may constitute economic control.
The principle of non-discrimination must therefore be understood substantively rather than merely formally. A regulatory system that says all airlines are entitled to apply for access, while permitting one dominant airline to determine the practical conditions of access, would satisfy formal equality while undermining substantive equality.
Article 15 and the Principle of Non-Discriminatory Access
This brings the question directly into the domain of the Chicago Convention.
Article 15 establishes important principles concerning airports and air navigation facilities and charges. Its deeper significance lies in the principle of non-discriminatory access to international aviation infrastructure. Contracting States are required to ensure uniform conditions for the use of airports and air navigation facilities in circumstances covered by the Convention, and the Convention contains protections against discriminatory treatment in charges for aircraft engaged in similar international operations.
Article 15 is therefore not simply an economic provision concerning the price of landing. It reflects a larger philosophy: international aviation infrastructure must not become an instrument for arbitrary or discriminatory treatment of international air carriers.
This principle assumes particular importance if an airline owns, operates or effectively controls an airport.
The fact that the airport is privately owned does not eliminate the international legal obligations applicable to the State in whose territory it is situated. Nor does the fact that an airline has invested capital in the airport transform the facility into a private domain beyond the reach of aviation regulation.
The airport is an economic facility, but it is also an instrument through which the international civil aviation system operates. If an airport operator could discriminate between airlines on the basis of nationality, corporate affiliation or competitive relationship, the architecture of international civil aviation would be compromised.
The same reasoning applies to competition. An airport serving a major metropolitan area may possess characteristics of an essential facility. If an airline dominates that facility, or an essential part of it, the relationship between airport power and airline market power becomes particularly sensitive. The airline may possess no legal authority to exclude competitors, but its influence over infrastructure may nevertheless produce exclusionary consequences.
The airport must function as a neutral platform upon which competing airlines can operate. The dominant airline, by contrast, has a legitimate commercial obligation to maximize its own network and shareholder value. These objectives are not necessarily compatible.
This is not to suggest that airline participation in airport governance should be prohibited. Such a conclusion would be excessive. Rather, it suggests that governance safeguards become more important as airline participation becomes more extensive.
There must be institutional mechanisms ensuring that infrastructure decisions cannot be manipulated to favour the shareholder airline at the expense of competitors.
Slots, Competition and the Problem of Effective Control
The same principle becomes particularly important in the allocation of airport slots.
A slot at a congested airport is not merely a scheduling convenience. It is an economic asset. Where runway capacity is constrained, possession of a desirable arrival or departure time can determine whether an airline can establish a viable route, construct a hub or compete effectively with an incumbent carrier.
Consequently, if an airline exercises substantial influence over airport infrastructure while simultaneously competing for slots, the potential conflict of interest becomes evident.
The airport must function as a neutral platform upon which competing airlines can operate. If Airline A controls the infrastructure through which Airline B must obtain access, the potential for structural discrimination is obvious.
The danger need not take the form of an explicit refusal. It may take subtler forms. Airline A may receive preferential access to gates. Its competitors may be assigned remote stands. Its preferred flights may receive more commercially attractive operating periods. Infrastructure necessary for competitors may be delayed. Facilities may be designed principally around Airline A’s hub model.
Competition can therefore be impaired not by price discrimination but by infrastructural discrimination.
That is a concept deserving greater attention in aviation law.
Infrastructural discrimination may occur through the allocation of scarce physical resources, the design of terminal facilities, investment priorities, passenger-processing arrangements, access to gates, baggage infrastructure, ground transportation connections or information systems. It may also emerge through the timing of infrastructure investment. Delaying a facility required by competitors while rapidly developing facilities useful to the dominant airline may produce competitive consequences without any explicit refusal of access.
The law should therefore become sensitive to the distinction between overt discrimination and structural advantage.
Article 28, Annex 9 and Annex 11: The State Remains Responsible
The problem becomes even more interesting when Article 28 of the Chicago Convention is considered.
Article 28 concerns the provision of airport and air navigation facilities and services. Its underlying philosophy is that international civil aviation cannot function safely and efficiently unless States provide, or facilitate the provision of, adequate airport and air navigation infrastructure.
The significance of the provision is that the State’s responsibility cannot simply disappear because infrastructure has been privatized, corporatized or placed under the management of a private airport authority.
Privatization does not necessarily mean denationalization of responsibility.
A State may transfer operational functions to an airport corporation. It may grant a concession to a private entity. It may permit an airline to participate in a terminal operating company. It may allow infrastructure investors to acquire airport assets. Yet the State remains bound by its international obligations.
The Chicago Convention does not cease to apply because the shareholder structure has changed.
This becomes particularly important in relation to Annex 11.
Annex 11 establishes Standards and Recommended Practices concerning air traffic services, including air traffic control, flight information and alerting services. The distinction between an airport and the airspace above and around it is fundamental here.
An airline may own a terminal. It may operate a terminal. It may participate in an airport company. But it cannot, merely by virtue of those commercial rights, acquire sovereignty over the airspace.
Nor should it be able to influence the provision of air traffic services for commercial advantage.
Air traffic control is not an airport commodity in the ordinary commercial sense. It is a safety-critical public function embedded within the State’s international responsibilities under the Chicago Convention and its Annexes.
The conceptual separation is therefore clear: airport infrastructure may be commercially owned or operated; air navigation remains subject to the sovereign and regulatory responsibilities of the State.
This distinction becomes increasingly important as airports develop sophisticated private operating structures.
The same principle extends to Annex 9 on Facilitation.
Annex 9 concerns the facilitation of international air transport and addresses the movement of aircraft, passengers, crews and cargo across international borders. Facilitation is therefore not merely a question of passenger convenience. It is an international regulatory function. The passenger entering an airport is simultaneously a consumer, a traveller crossing a sovereign border and a participant in an international transport system.
If an airline exercised excessive control over airport facilities, the temptation could arise to design facilitation processes around the needs of its own network. Again, there may be perfectly legitimate reasons for airline-specific facilities. Hub airlines require efficient transfer systems, dedicated baggage infrastructure and carefully designed passenger flows.
But facilitation cannot become a mechanism for discrimination.
The airport is a point of interface between commercial aviation and the sovereign State. Immigration authorities, customs authorities, health authorities and security agencies exercise public functions within it. The airport operator facilitates those functions but does not replace them.
This is why the distinction between operator and regulator remains indispensable.
An airline may be a stakeholder in the airport. It may be an investor. It may be a terminal operator. It may be a dominant customer. But it cannot become the regulator of the airport merely because it has accumulated economic influence.
The Airport as a Common-Use Platform
This brings us to the broader question of airport governance.
A modern airport should be understood as a common-use platform subject to regulated private participation. Private capital, airline expertise and commercial discipline can coexist with public oversight and international legal obligations. What must be prevented is the transformation of a common-use aviation facility into a private competitive weapon. This is particularly important where an airport is capacity constrained.
At an uncongested airport, discrimination may be commercially undesirable but relatively easy to correct because alternative capacity exists. At a congested hub, however, access to gates, terminal space and slots can determine whether a competitor survives. The economic consequences are therefore considerable.
A dominant airline that controls infrastructure may enjoy a structural advantage over rivals even if its ticket prices are not predatory and even if it complies formally with every published airport rule. Competition can be impaired not by price discrimination but by infrastructural discrimination. The law therefore needs to become sensitive to the distinction between formal access and effective access.
An airline may theoretically be permitted to operate at an airport while being denied the practical conditions necessary to compete. In such circumstances, the legal appearance of equality may conceal economic inequality. This is where the concept of effective control becomes indispensable.
A New Regulatory Vocabulary
The aviation industry should resist the temptation to regard ownership as the sole measure of power. In modern aviation, control is increasingly exercised through networks of contracts, investment, infrastructure, data, slots and operational dependency.
An airline may not own the airport, yet may possess sufficient influence to shape its destiny. That reality should concern regulators.The answer is not to prohibit airline participation in airport infrastructure. Such participation can bring capital, efficiency and operational expertise. The answer is to establish a regulatory architecture in which airline investment is accompanied by transparency, independent governance, non-discriminatory access and effective oversight.
Airline participation should therefore be assessed according to its degree of effective control, rather than simply its percentage of ownership. A 40 per cent shareholder with substantial veto rights may be more powerful than a 51 per cent shareholder whose rights are dispersed. A dominant airline may exert greater influence through traffic concentration than through corporate ownership. A terminal concession may provide greater practical control than a minority shareholding.
The law should recognize these realities.
This principle could become increasingly important as airport infrastructure becomes more privatized and as airlines seek greater influence over the facilities upon which their business models depend.There is nothing inherently wrong with an airline investing in an airport. Aviation infrastructure requires enormous capital, and airlines possess technical knowledge that can improve infrastructure planning. Lufthansa’s continuing partnership with Munich Airport demonstrates how airline participation can become an integral component of long-term airport development rather than merely an incidental investment.
The danger lies elsewhere.
It lies in the possibility that the airport ceases to be a platform for competition and becomes an instrument of competition. That is the point at which the distinction between ownership and control becomes legally significant. Ownership asks who possesses the asset. Control asks who possesses the power. International aviation law must be concerned with both, but when the two diverge, control may be the more revealing concept.
The Chicago Convention and the Airport of the Future
The Chicago Convention was conceived in 1944 in a world of State-owned airlines, State-operated airports and comparatively simple aviation markets. The contemporary aviation environment is radically different. Airports may be privately financed, airlines may be multinational groups, terminals may be jointly owned, air navigation may be institutionally separated from airport management, and digital infrastructure may connect multiple participants in real time.
Yet the foundational values of the Chicago Convention remain remarkably durable: safety, orderly development, equality of treatment and international cooperation. The challenge is to apply those principles to a commercial landscape that the framers of the Convention could scarcely have imagined.
The airport of the future may therefore not have a single owner.But it must have a clear constitutional order of responsibility. An airline may own a terminal. It may operate a terminal. It may finance a runway-related project. It may participate in strategic investment decisions. It may even become the dominant economic force at an airport. What it cannot be permitted to become, by stealth of corporate structure, is the sovereign of the airport.
The ultimate test is therefore not whether an airline possesses legal title. It is whether its economic and operational influence permits it to determine access to an essential aviation facility in a manner inconsistent with competition, non-discrimination, safety or the State’s international obligations.
That is where ownership ends and control begins. And it is precisely at that boundary that the future of airport governance—and perhaps an important part of the future interpretation of the Chicago Convention—will be decided.
My Take
The aviation industry should resist the temptation to regard ownership as the sole measure of power. In modern aviation, control is increasingly exercised through networks of contracts, investment, infrastructure, data, slots and operational dependency. An airline may not own the airport, yet may possess sufficient influence to shape its destiny. That reality should concern regulators.
The answer is not to prohibit airline participation in airport infrastructure. Such participation can bring capital, efficiency and operational expertise. The answer is to establish a regulatory architecture in which airline investment is accompanied by transparency, independent governance, non-discriminatory access and effective oversight.
Article 15 of the Chicago Convention should be read not merely as a provision about charges but as an expression of the deeper principle that international aviation infrastructure should not become an instrument of discriminatory treatment. Article 28 reminds us that the State cannot contract away its ultimate responsibility for adequate aviation infrastructure. Annexes 9 and 11 reinforce the distinction between commercial airport activity and the public functions of facilitation and air traffic services.
The airport is therefore neither entirely public nor entirely private. It occupies an unusual legal space in which private enterprise performs functions of enormous public consequence. The governing principle should be simple: private ownership may be permitted; private capture should not be. The true question of the future will consequently not be, “Who owns the airport?”
It will be: “Who controls the gateway through which the world flies—and under whose rules?” That is a question which aviation regulators, competition authorities and ICAO can no longer afford to leave unanswered.
