Perceptions of Privatisation and Corporate Performance: A Study of Sydney Airport Stakeholders Dorothea Maria Zakrzewski A thesis presented to the University of Western Sydney in partial fulfilment of the requirements for the degree of Doctor of Philosophy February 2009 1 Dedication I dedicate this thesis to my parents; my mother Danuta-Anna Werner Zakrzewski and my father Kris Zakrzewski, who have always supported me along the way. 2 Acknowledgements I would like to acknowledge the advice, support and assistance of many people, but will restrict myself to the key contributors. Most importantly I would like to offer my deepest thanks to Jim and Glenda Davis who have shared their passion for the aviation industry with me. Jim’s network in the aviation industry enabled the data collection for this project to be of the highest standard. Glenda’s extraordinary friendship, support and her patience have made my PhD journey truly worthwhile. I am also deeply grateful to my supervisors, Professor Ross Chapman, Professor Roger Juchau and Dr Anneke Fitzgerald who provided support, encouragement and friendship as well as challenging supervision. Their invaluable guidance, commentary and insights along the way have helped shape this thesis. I would also like to thank my family for the endless support that I have received with the ‘ups and downs’ throughout the PhD journey: my sister Anna, who was always eager to hear about the project, and my mother Danuta and my father Kris, who encouraged me not to give up but to continuously strive towards completion whilst recognising that a PhD is a milestone for my career and future undertakings. Finally, having received a competitive grant provided by the Institute of Management Accountants (IMA) Foundation for Applied Research, I would like to acknowledge their financial support 3 Statement of Authentication The work presented in this thesis is, to the best of my knowledge and belief, original except as acknowledged in the text. I hereby declare that I have not submitted this material, either in whole or in part, for a degree at this or any other institution. ……………………………………………… Dorothea Maria Zakrzewski February 2009 4 Table of Contents DEDICATION 2 ACKNOWLEDGEMENTS 3 STATEMENT OF AUTHENTICATION 4 TABLE OF CONTENTS 5 LIST OF FIGURES 10 LIST OF TABLES 11 LIST OF APPENDICES 12 ABBREVIATIONS 13 GLOSSARY 15 ABSTRACT 25 CHAPTER 1 28 1 Introduction 1.1 Relevance of the Study 28 1.2 Statement of the Problem 30 1.3 Purpose & Objectives of the Study 30 1.4 Research Questions 32 1.5 Significance of the Study 33 1.6 Research Methodology 35 1.7 Organization of the Study 36 1.8 Delimitations of the study 38 1.9 Definition of terms 39 1.10 Chapter Conclusion 39 5 CHAPTER 2 40 2 Background to the Privatisation Phenomenon 2.1 Introduction 40 2.2 The Rationale of Privatisation 40 2.3 The Origin and Ideology of Privatisation 42 2.4 Implications of Ownership and Management Changes on Efficiency Gains 45 2.4.1 Reported Privatisation Outcomes 48 2.5 Implementing Privatisation Reforms – Who does benefit? 52 2.6 Chapter Conclusion 55 CHAPTER 3 57 3 Insight into Privatising the Air Transport Industry: Airport Privatisation 3.1 Introduction 57 3.2 The drivers behind Airport Privatisation 57 3.2.1 Airport Privatisation Concerns 59 3.2.2 Airport Privatisation Methods & Deals 61 3.3 Ownership, Management and Control: Comparative Airport Privatisation Experiences in the US, UK and Australia 65 3.3.1 The US Experience 66 3.3.2 The UK Experience 67 3.3.3 The Australian Experience 67 3.4 Emergence of Airport Stakeholders 71 3.4.1 Effect on Stakeholder Operations in Australia 72 3.4.2 Future Outlook of the Privatised Air Transport Industry 75 3.5 Chapter Conclusion 77 CHAPTER 4 79 4 Performance Measurement, Stakeholder Theory & The Conceptual Framework 4.1 Introduction 79 4.2 Significance of Performance Measurement 79 4.3 Difficulties when Assessing Privatisation Outcomes 83 4.3.1 The Challenge with Performance Measurement at Privatised Airports 87 6 4.4 The Conceptual Framework for this Study 89 4.4.1 Relevance of Stakeholder Theory to Performance Measurement 92 4.4.2 Airport Stakeholder Identification 94 4.4.3 Applying the Balanced Scorecard Rationale to Airport Performance Assessment 98 4.4.4 The ‘Experimental’ Stakeholder Airport Performance Assessment Tool 102 4.5 Chapter Conclusion 108 CHAPTER 5 109 5 Research Methodology & Design 5.1 Introduction 109 5.2 Research Process 109 5.3 Step 1: Justification of Theoretical Paradigm & Research Perspective 112 5.4 Step 2: Research Strategy – A Qualitative Approach using Case Research 5.5 Limitation of the Methodology 119 5.6 Step 3: Designing the Research 120 5.6.1 Case Setting Groundwork 121 5.6.2 Sampling 124 5.6.3 Interview Preparation 126 5.6.4 Open Ended & Theory Driven Interview Questions 128 5.6.5 Ethical Considerations prior to Interviewing 129 5.7 Step 4 : Conducting the Research 130 5.7.1 Field Research: Semi Structured Interviews 130 5.7.2 Data Processing 131 5.7.3 The Researcher as Key variable 131 5.8 Step 5: Analysing the Data 132 5.8.1 Content Analysis 132 5.8.2 Leximancer 134 5.8.3 Nvivo Version 7 137 5.8.4 Data Triangulation 138 5.8.5 Reliability and Validity of this Study 139 5.9 Step 6: Reporting the Research 140 5.9.1 Overall Concept Detection of this Study 142 5.9.2 Vocabulary Definitions making up the Concepts for this Study 145 5.9.3 Relatedness of the Concepts explored in this study 147 5.9.4 Concept Mapping 149 5.10 Chapter Summary 152 7 CHAPTER 6 154 6 Introducing Sydney Airport at a Glance 6.1 Introduction 154 6.2 Overview of Sydney Airport 154 6.3 Snapshot of the Performance of Sydney Airport 160 6.4 Chapter Conclusion 166 CHAPTER 7 167 7 The Stakeholders and their Views on Privatising Sydney Airport 7.1 Introduction 167 7.2 Sydney Airport Stakeholder Identification and Confirmation 168 7.2.1 Stakeholder Roles 171 7.2.2 Stakeholder Power and Control over Airport Operations 174 7.2.3 Summary of Stakeholder Identification Results 179 7.3 Stakeholder views on privatising Sydney Airport 180 7.3.1 The Privatisation process 183 7.3.2 Privatisation Objectives 185 7.3.3 Comparison of Stakeholder Views vs Government Objectives on privatising Sydney Airport 192 7.4 Chapter Conclusion 195 CHAPTER 8 197 8 Impact and Privatisation Consequences from Stakeholder Views 8.1 Introduction 197 8.2 Overall Reflections on the Privatisation Outcomes at Sydney Airport 198 8.2.1 Airport land development & capacity issues 201 8.2.2 Transparency, Accountability and the Commercial Negotiation Process 205 8.2.3 Unexpected Consequences 213 8.2.4 Summary Section 8.2 – Perceptions of the overall Privatisation Impact on Stakeholders 218 8.3 Privatisation Outcomes on Individual Stakeholders 218 8.3.1 Airline Stakeholder Perspective 219 8.3.2 Investor Stakeholder Perception 225 8.3.3 Airport Operator Stakeholder Perspective 231 8 8.3.4 Community and Government Perspective 234 8.3.5 Others – Infrastructure Support Providers 239 8.3.6 Summary Section 8.3 241 8.4 Chapter Conclusion 241 CHAPTER 9 242 9 Stakeholder Airport Performance Assessment Model (SAPAM) 9.1 Introduction 242 9.2 SAPAM Development 244 9.2.1 A Review of the Findings justifying the model 244 9.2.2 The Conceptual Framework and the “Experimental” Model 246 9.3 Modifications to the “Experimental” Model 252 9.3.1 Model Section 1: Operational Perspective 254 9.3.2 Model Section 2: Financial Perspective Indicators 265 9.3.3 Model Section 3: Social and Environmental Perspective Indicators 269 9.4 The SAPAM Model 276 9.5 Chapter Conclusion 279 CHAPTER 10 281 10 Final Discussion and Conclusion Chapter 10.1 Introduction 281 10.2 Key Findings & Discussion 286 10.2.1 Rationale for Privatising Sydney Airport (RQ 1 Outcomes) 287 10.2.2 Impact of Privatisation on Stakeholder Operations (RQ 2 Outcomes) 291 10.2.3 Performance Measurement of privatised airport operations (RQ 3 and RQ 4 Outcomes) 297 10.3 Implications of Research Outcomes for Theory 301 10.4 Implication of Findings for Practice 306 10.5 Limitations 307 10.6 Areas of Future Research 308 10.7 Chapter Conclusion 310 REFERENCES 311 APPENDICES 325 9 List of Figures Figure 1-1: Privatisation Impact & Airport Stakeholders ............................................32 Figure 1-2: Target of the Theoretical Framework.......................................................34 Figure 1-3: Applied Research Design Attributes ........................................................36 Figure 3-1: Productivity Commission Problem Identification......................................73 Figure 4-1: The Linkage between Theories ...............................................................91 Figure 4-2: Research Focus illustrated with a Venn diagram ....................................92 Figure 4-3: Stakeholder Classification .......................................................................95 Figure 4-4: Perspectives for Airport Performance Assessment ...............................105 Figure 4-5: The Experimental Stakeholder Airport Performance Assessment Model .................................................................................................................................107 Figure 5-1: Overview of the Research Process .......................................................110 Figure 5-2: Case Research Framework ...................................................................119 Figure 5-3: Pilot Testing...........................................................................................128 Figure 5-4: Data Triangulation .................................................................................139