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Airport Privatization in the United States

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Handbook on Public Private Partnerships in Transportation, Vol I

Part of the book series: Competitive Government: Public Private Partnerships ((CGPPP))

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Abstract

Prior to the COVID-19 pandemic, airport infrastructure investments, such as new runways, modern terminals, and improved ground access, were a top priority for governments and the traveling public. The robust revenues from parking, concessions, and landing fees piqued the interest of private sector investors looking for stable, long-term returns. While the current economic slowdown brought airport operations nearly to a halt, there is an expectation that it will eventually return to normal. When it does, there may be increased interest in airport privatization of state and local governments that are strapped for cash. Governments may be interested in giving airport investment and management responsibilities to a private company that keeps excess returns, and then invest to attract more air service and passengers. While airports are commonly privatized abroad, only one airport is privatized in the United States. This chapter reviews the policies that govern airport privatization in the United States, recent history in domestic case studies, and the implications going forward. At the end, circumstances unique to the United States greatly limit the usefulness of privatization in solving airport problems. While privatization may be attractive in some very specific contexts, policymakers first need to clearly understand the problem they are trying to solve and then determine whether privatization is the best approach.

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Notes

  1. 1.

    This analysis focuses on commercial airports, rather than general aviation since the federal pilot program is directed primarily at the former.

  2. 2.

    49 US Code § 44901.

  3. 3.

    49 US Code § 47107 (b)

  4. 4.

    H.R. 302 (P.L. 115–254), the FAA Reauthorization Act of 2018

  5. 5.

    A commercial airport is one with regularly scheduled flights served by airlines for passengers and freight. General aviation airports serve noncommercial, largely “private” aircraft.

  6. 6.

    The actual provision is 65%t of all airlines using the airport and airlines representing 65% of the annual landed weight (FAA, 2018).

  7. 7.

    The airport was recently renamed New York Stewart International Airport in 2018 to enhance its appeal to travelers in the region (Howland, 2018).

  8. 8.

    The operator was technically SWF Airport Acquisition, Inc., a wholly owned subsidiary of National Express Corporation, which is a wholly owned subsidiary of NEG.

  9. 9.

    Eno analysis of FAA data “Passenger Boarding (Enplanement) and All-Cargo Data for US Airports.”

  10. 10.

    The PRPA also managed Puerto Rico’s ten other airports and maritime port facilities. One study found that the institutional model of airports managed by authorities with jurisdiction of multiple air and maritime ports is almost always the least efficient.

  11. 11.

    Eno analysis of FAA data “Average Domestic Airline Itinerary Fares.” Figures are for inflation-adjusted average fares. Hurricane Maria made landfall in September 2017 and certainly has had a major impact on passenger demand and airfares, but the figures from 2017 and 2016 are nearly identical. We also recognize that since 2005 airlines have begun to unbundle charges for things like checked bags, seat selection, meals, and drinks from the total ticket price.

  12. 12.

    In 2008, Chicago received an upfront payment of $1 billion and leased the city’s parking meters to a group of private investors. The deal was criticized for its lack of transparency and was called a “dubious financial deal” by the city’s Inspector General.

  13. 13.

    Mayor Francis Slay retired in 2017, and the new Mayor Lyda Krewson continued to pursue privatization and recently selected an advisory team for the proposal.

Abbreviations

ASUR:

Aeroportuario del Sureste

AIP:

Airport Improvement Program

AIPP:

Airport Investment Partnership Program

APPP:

Airport Privatization Pilot Program

ACI-NA:

Airports Council International-North America

BPC:

Bipartisan Policy Center

BTS:

Bureau of Transportation Statistics

COVID-19:

Severe Acute Respiratory Syndrome Coronavirus-2

FAA:

Federal Aviation Administration

GAO:

US Government Accountability Office

House T&I:

US House Transportation and Infrastructure Committee

IATA:

International Air Transport Association

LMM:

Luis Muñoz Marín Airport

MIDCo:

Midway Investment and Development Corporation

NEG:

National Express Group

NYSDOT:

New York State Department of Transportation

PABs:

Private activity bonds

PPP:

Public-private partnerships

PRPA:

Puerto Rico Ports Authority

P3A:

Puerto Rico Public-Private Partnerships Authority

TWA:

Trans World Airlines

USDOT:

US Department of Transportation

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Author information

Authors and Affiliations

  1. Eno Center for Transportation, Washington, DC, USA

    Robert Puentes & Paul Lewis

Authors
  1. Robert Puentes
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  2. Paul Lewis
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Correspondence to Robert Puentes .

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Editors and Affiliations

  1. Center for Competitive Government, Department of Economics in the College of Liberal Arts, Temple University, Philadelphia, PA, USA

    Simon Hakim

  2. Environmental Engineering and Public Health Consultant, Cincinnati, OH, USA

    Robert M. Clark

  3. Center for Competitive Government, Department of Economics in the College of Liberal Arts, Temple University, Philadelphia, PA, USA

    Erwin A. Blackstone

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Puentes, R., Lewis, P. (2022). Airport Privatization in the United States. In: Hakim, S., Clark, R.M., Blackstone, E.A. (eds) Handbook on Public Private Partnerships in Transportation, Vol I. Competitive Government: Public Private Partnerships. Springer, Cham. https://doi.org/10.1007/978-3-030-83484-5_5

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