The Federal Aviation Administration recently decided to accept applications to privatize airports in the United States. Under a congressional mandate, the FAA will permit corporations to purchase the nation's airports outright or hold long-term leases.

The FAA's announcement allows for demonstration projects at five of the nation's 567 public commercial airports. But countries from Germany to Australia are now racing to privatize their airports, recognizing that private industry is more efficient than government. In Australia, for example, leasing three airports to private industry will put nearly $3 billion into government coffers.

How can private industry offer such astronomical bids?

• Commercialization at privatized airports around the world allows developers to build hotels, gourmet restaurants, health clubs and shopping centers on airport property.

• Retail analysts report an airline passenger will spend an average of $75 in an airport with upscale amenities, compared to about $20 today.

Such operations have been successful at publicly owned airports in the United States. For example,

• Detroit's Metro Airport created the aura of an upscale mall, allowing the county to take $1.5 million from retail operations to push the facility out of the red.

• Pittsburgh International Airport increased per-passenger revenue from $3 to $8 by focusing on new amenities.

Stewart Airport, run by the state of New York, is expected to be the first airport in the nation to undergo the FAA review allowing a public-to-private handoff.

The advantage to taxpayers, say observers, is that private capital instead of taxpayers' money will be used to finance airport improvements.