Dickson Igwe. Photo: VINO/File

All over the world, airport privatization is the norm, or better stated variances of an airport privatization model. There are different forms of airport privatization. Each is unique to the location and culture where the airport sits.

Airports are part of a country’s strategic infrastructure. They enhance a country’s geostrategic integrity, and are considered physical symbols of sovereignty. In a financial services and tourism economy, with a unique maritime and boating product, building an airport that can directly connect with large nearby cities is a worthwhile gamble.

An airport that can land large jet aircraft offers additional travel options for the British Virgin Islands. Although, this Old Boy still sees the ferry from the USVI to West End and Road Town, and vice versa, remaining the key travel option, and main entry and exit point, even after the new airport and extended runway is completed.

In any event, a policy must be set in place to ensure that Virgin Islanders and Belongers benefit socially and economically from the proposed privatized airport project. This should mean a public and private partnership that impacts the community positively. It should also be fully transparent and equitable.

Spending taxpayer cash on developing assets that would be better left to private sector investment is OPPORTUNITY COST. Opportunity cost is an economic term. It represents the lost opportunity resulting from spending on a particular thing. That lost opportunity is the next best alternative that could have been had if the cash was spent on that alternative. Obviously, that is a subjective matter based on individual opinion.

For example a family spending on a new vehicle could represent going without something else such as a home extension. The home extension is the opportunity cost of the new car.

Taxpayer cash spent on a project that private investment could better finance represents a loss of public revenue that could be targeted at a more worthy cause. The opportunity cost is what public revenues spent on the airport could have been spent on instead.

Using private investment in developing certain types of project is OPPORTUNITY GAINED. In other words, if one can use someone else’s money to gain the same effect: then why not? This is in effect a saving of taxpayer cash.

In any event, privatization is an acceptable method for injecting private capital and business efficiency into the public sector. It is good for the taxpayer if well targeted. Economists in general accept Foreign Direct Investment as a viable investment option.

Privatization also frees government to focus on what government does best: manage areas of the economy private enterprise will not touch, such as the social infrastructure and certain types of physical infrastructure such as the roads network. However, privatization must be thoroughly regulated to ensure the protection of the public from dubious practices.

Now This Old Boy believed that the Pier Project would have been better left to the private sector to develop: “hook, line, and sinker.” And the airport project costs many times the pier project.

Had both projects been given to the private sector to develop from day one, under an arrangement agreeable to the taxpayer, government would have been better focused on developing the sewage and water distribution projects, and spending on education, health, and social welfare: key priority areas.

Government would not have got itself so ‘bogged down,’ in political semantics. The Public Relations of successfully telling Joe Resident and Jane Citizen why it was best to allow the private sector invest and manage the Airport and pier projects was nonexistent; hence their unpopularity to a significant number of residents. All governments in free democracies sell their policies. That is what gets these policies realized. A skeptical voter is always a problem to an incumbent government.

In any event, any economist worth his salt will state that spending over a third of GDP on one physical project is “insanity.”

The airport project spending would be equivalent to 100% of annual public revenues. That is a massive financial burden, even if government could borrow the full amount. Interest payments on such a loan could be crippling. When resources are scarce, certain spending is best carried out by the private sector.

The OPPORTUNITY COST or OPPORTUNITY LOST, in spending up to 400 million USD on an international airport in the British Virgin Islands is the 400 million that could have been better spent on other more important and socially oriented projects in areas such as education, health, and social welfare.

In other words The OPPORTUNITY GAINED in using the private sector is the freeing of cash for a number of more important projects, such as better schools; better healthcare; and better social welfare.

Opportunity gained as a result of airport privatization further means the opportunity to build a better physical infrastructure. If frees public cash to be put towards more pressing matters such as the ferry port infrastructure; better road networks with comprehensive street lighting; better countrywide sanitation and sewage, and so on, and so forth.

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