ORANGE COUNTY IN BANKRUPTCY : Other Countries Use Privatization : Finances: Great Britain and Canada pioneered in the sale or lease of airports to generate revenue. Only a few small U.S. airports are run by private operators.

While there has been a great deal of discussion about letting private operators take over airports in the United States, most airport privatization has occurred in other countries.

Privatization took hold in the 1980s when conservative governments in Canada and Great Britain began looking for ways to more efficiently perform public services while easing the financial burden on taxpayers.

In Canada, the Conservative government decided in 1987 to privatize 99 government-run airports. It also undertook a partial privatization of Canada’s largest, Pearson International Airport in Toronto.

The idea gained greater attention the same year when Great Britain privatized London’s Gatwick and Heathrow airports. The airports’ sale in a public stock offering raised $2.5 billion for the British treasury.

More important, the sale attracted millions of dollars in private investment. The airports’ services were upgraded and developers built shops that prompted passengers to spend more money at the facilities.

The success in Britain has led numerous other countries--including Australia, Turkey and Russia--to privatize airports. Many cities in the United States have also explored the possibility of privatization, but legal, political and practical obstacles have frustrated most efforts.

The proponents of privatization say it provides efficient operations, new sources of funds and improved customer amenities such as shopping malls, and shifts risks from taxpayers to the private sector. But critics counter that it often means higher costs to users, less public accountability and less control over operations, expansions and development.

According to the Reason Foundation, a Los Angeles-based conservative think tank that supports privatization, fewer than a dozen small U.S. airports are privatized--that is, leased or managed by private firms.

But in the last five years Atlanta, Baltimore, Boston, Indianapolis, Los Angeles, New York, Philadelphia, San Francisco, Syracuse, N.Y., and Worcester, Mass., have all considered privatization.

“A major factor in the growing interest in airport privatization is government fiscal stress,” said Robert W. Poole Jr., head of the foundation.

He said commercial airports often fail to generate a reasonable rate of return when operated by the government. Poole believes the push to reinvent government will increase the pressure to treat airports as business enterprises that should be run by the private sector.

The simplest form of privatization is contracting out the management of the airport for a short period. Lockheed Air Terminal operates the airports in Burbank and in Albany and Stewart, N.Y., under such a contract.

A municipality also can privatize by offering a long-term lease of an airport to a company, allowing the firm to operate and develop the facility. Atlantic City, N.J., leases its airport to Johnson Controls World Services on this basis.

Finally, a government entity can sell its airport outright. While such sales are now common abroad--as with London’s Gatwick and Heathrow, for instance--none has occurred in the United States.

Albany, seeking to free up funds for other government services, tried to sell its airport to Lockheed in 1989 for $30 million. But the Federal Aviation Administration objected, saying federal money spent to build the airport could not be used for other purposes. Albany dropped the sale plan.

Canadian Prime Minister Jean Chretien last year stopped the privatization of two terminals in Toronto when his Liberal government declared that the proposal was not in the public interest. Chretien charged that business interests were being enriched at the expense of the public.

Privatization is largely opposed by airlines, which fear higher landing fees. “We have never seen a privatization that brought costs down,” said Edward Merlis, vice president of the Air Transport Assn. of America, an airline industry trade group.