Airlines with significant private ownership typically offer different opportunities to investors than government-owned companies. Private ownership usually makes airlines leaner and more efficient as owners seek higher profits for investors. The possibility of losing investment funding forces private airlines to continuously reduce operational fixed costs and improve load factors. Privatization of airlines previously owned by governments has become increasingly common. These airlines are often considered a public utility, and most nations heavily regulate airlines. Governments choosing to operate airlines seek to protect public transportation and expand access to services. Some governments see airlines as expensive burdens and view the private sector as a saving force with the power to fund airline services and improve upon them. Criticism of privatization continues, however, as some services and routes are cut by private airlines to improve profitability. Investors should be aware of the potential risks and rewards of investing in these different airline sectors.

In the 1980s, governments began privatizing many airlines around the world. Government regulation previously set ticket prices, approved route changes and controlled which companies entered the industry. Since then, many public airlines have taken on private investors. Government funds may not completely cover expenses, so private sector investment may be necessary to keep airlines solvent. Investors should carefully research available financial data between the public and private sectors for all airlines owned by partnerships. Some government airlines become partially privatized out of financial desperation and have weak earnings, if any. Government airlines often subsidize unprofitable routes as a public service. While this benefits local consumers, many investors consider it to be an inefficient practice. However, struggling public airlines are often more likely to receive government help and use public funds to rescue private losses. This may benefit investors.

Private airlines are less-regulated than state-owned enterprises and are often more flexible. Since they answer only to shareholders, private airlines may choose their own routes and discontinue unprofitable services. As a result, some private airlines provide fewer services or less quality service. Cost control is more important to private airlines; this may benefit investors by making the airline more profitable. Failing private airlines, however, do not necessarily receive government funds and subsidies. This may make private airlines more vulnerable than public companies. Private airlines are often more likely to adopt competitive industry practices that keep labor costs down and respond quickly to consumer needs.

Airlines in the midst of the privatization process present their own challenges for potential investors. This process may cost more than starting a new airline altogether. For this reason, mergers and acquisitions may be more practical for some public airlines than privatization. More established private or public airlines may purchase shares of a struggling public airline and create an opportunity for investors to acquire new routes and markets.

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