The privatization and economization of the air transport market

The expression of the increasing economization of the German air transport market is reflected, among other things, in the privatization of the “FlagCarrier” of the Federal Republic of Germany, the German Lufthansa. Until the 1980s, the federal government had the right to exert an influence on corporate law on German scheduled airlines, including Lufthansa. this oneInfluence was based on the state’s socially recognized responsibility to provide the air service and to ensure its safety.

State influence up to the 1980s

From the state’s point of view, “satisfaction” and “security” of public air transport interest was associated with an influence that went beyond the legal competences in the aviation sector – according to the general opinion. It was already evident when Deutsche Lufthansa was on the IPO in 1966 that the state majority share was an important control instrumentshould represent in favor of the public. Therefore, the federal government maintained its policy of majority stake until the capital increase in 1978, with around 75 percent of the shares being state-owned by this point in time.

The trend towards deregulation and first privatization measures

The global trend towards deregulation in aviation, whose origins were in the USA, was ultimately decisive for Lufthansa’s first partial privatization. With the increasing deregulation, competition in the scheduled flight sector was created for the first time. In order to survive in this competition, the federal government decided to involve private investors. As part of furtherCapital increases At the end of the 1980s and early 1990s, the federal government’s share in Lufthansa gradually decreased from 75 to almost 51 percent.

The influence of the European internal market and the further privatizations

In addition to the ongoing deregulation of international air transport, the entry into force of the Treaty on the European Internal Market in 1993 was another turning point in the privatization process; As a result, the legitimacy of a majority share of the federal government in Lufthansa AG was increasingly questioned. In contrast to the previous political orientation, the EU pursuedA consistent policy of less control and control of scheduled airlines by the state. In addition, the significant losses suffered by Lufthansa AG during the 1992 aviation crisis increased the state will to further privatize the airline.

The last step: full privatization of Lufthansa

In order to ensure a competitive airline, the last step towards full privatization was initiated in 1997, when the federal government brought the remaining 37.5 percent of its shares in Lufthansa to the stock exchange. Once again, full privatization developed from an announced partial privatization.

Air traffic control privatization: resistance and background

The privatization of the German Air Traffic Control (DFS), on the other hand, met with resistance from the Federal President’s Office; According to Section 27c Paragraph 2 of the Air Traffic Act, this is responsible for safety and punctuality in national air transport and monitors more than three million flight movements every year.

History and development of air traffic control in Germany

The company, based in Langen, Hesse, was founded in January 1993 and replaced the national military air traffic control and the Federal Agency for Air Traffic Control (BfS) as the central control body for civil and military air traffic. The BfS was founded in 1953 as part of the federal air traffic administration to monitor German airspace.Her special position was shown, among other things, by the fact that at the time it was decided by law to officially officials the staff consisting of employees. The aim of this measure was to prevent labor disputes and strikes among the pilots and to avoid the associated operational difficulties in growing national air traffic.

Cost development and privatization of air traffic control

The increase in air traffic in Germany was associated with increasing costs for national flight monitoring, which caused a deficit of 100 to 200 million Deutschmarks in the air traffic control budget year after year. These deficits led to the federal government initiating the privatization of the federal authority in the early 1990s; As already mentioned, the BfS was on January 1st1993 transferred to DFS as a limited liability company.

Organizational and financial aspects of privatization

To meet the requirements of Art. 87 D GG To do justice to the federal administration of air transport, only the organizational form changed in this first step towards privatization, while ownership remained unchanged. In order to achieve the goal of a financially independent service company formulated by the federal government, the federal government increased theEquity to 410 million Deutschmarks. The most expensive aspect of this organizational transformation was undoubtedly the financial vested rights guarantee for the staff. In order to persuade the remaining civil servants to move to an employment relationship, the federal government had to accept significant salary increases for the air traffic controllers and high additional payments to the statutory pension insurance – alsoThis is a financial flip side of many privatizations.

Further development and current structure of the DFS

DFS remains in the possession of the Federal Republic of Germany and is subordinate to the Federal Ministry of Transport, Construction and Urban Development. Originally founded as a company without the intention of making a profit, cost-covering management has been declared a primary goal over time. This new corporate policy was expressed in comprehensive rationalization and a clear oneIncrease in and departure fees for navigation services and facilities.

Expansion and legislative initiatives for privatization

The company’s expansion, which was carried out in parallel, meant that DFS now monitors 16 international airports and nine regional airports, while being represented by its subsidiary “The Tower Company”. A comprehensively discussed turn towards economizing air traffic control was the Air Traffic Control Act, which was presented to the German Bundestag in 2005;This should pave the way for a capital privatization of the DFS.

The planned capital privatization and political controversy

In contrast to the purely formal privatization of 1993, material capital privatization should now be initiated; Therefore, the law submitted made it possible to sell 74.9 percent of the federal DFS shares to private investors. In order to preserve the federal influence of the federal air traffic control, the federal government should be granted a blocking minority of 25.1 percent. theHowever, implementation of the law, which had already been passed by the Bundestag, failed in the same year due to the veto of the then Federal President Horst Köhler. He argued that under applicable law, air traffic control is a sovereign task, which must be carried out by the state itself and should not be delegated by private companies.

Perspectives and European Developments

If Köhler had signed the law in the Federal President’s Office on October 24, 2006, it would most likely have been privately owned by the majority today. This assumption also seems plausible because the vision of a “single European Sky” formulated by the EU Commission in 2004, i.e. a uniform European airspace, for the DFS is an extremely attractive, butrepresents a costly growth opportunity.

Future prospects: privatization and competitiveness

In order to be able to compete with other European air traffic control companies, many transport politicians are relying on a stronger market orientation of the DFS through capital privatization. In preparation for such a material privatization, Art. 87 GG the term federal administration replaced by “Federal Administration”; Thus, the equipment is now becoming more privateActors with sovereign rights enable partial privatization of the DFS. Once again, the expected income of around one billion euros from the sale of three quarters of the shares is a major reason for the federal government to complete the process of privatizing air traffic control.