Incentive mechanisms for large Public-Private Partnerships : Empirical evidence from SESAR

Abstract: The purpose of our thesis is to investigate the incentive mechanisms that may be used for a timely and successful implementation of Public-Private Partnership (PPP) projects. This purpose is achieved by investigating challenges and success factors within one of the largest Public-Private Partnership projects in Europe, the SESAR programme which stands for Single European Sky ATM Research and that aims at modernising the European air traffic management (ATM) system. The categories of SESAR actors that we investigated include: stakeholders (airspace users such as Air France, KLM, SAS; ANSPs from Sweden,Finland, Netherlands and the CANSO organisation; airport representatives including Swedavia, Zürich Airport and Guernsey Airport); as well as manufacturers (e.g. Airbus, Frequentis, Thales); international organisations as principals (e.g. European Commission – SESAR Joint Undertaking-, EUROCONTROL) and advisers (e.g. Helios UK). Referring to our contribution to the theory, we identify four categories of incentive mechanisms for timely implementation of large PPP projects: i. Financial incentives such as loans, proportionate with the level of risks the implementer bears; the deduction of loan fees or reduction of service charges can motivate stakeholders to implement earlier, once they identify a positive business case. ii. Operational incentives can refer to certain preferential treatment to those who comply and detrimental treatment to those who do not comply. iii. Legal incentives such as mandates can force commitment and have an impact on the timely implementation of PPP projects within a certain time-frame. iv. Intangible incentives, such as transparent communication, collaboration and less political behaviour, are seen as major factors contributing to the commitment and trust level among the actors involved, thus, enabling the success of the PPP project implementation.