Preliminary Application To Privatize St. Louis Airport Approved!

By April 30, 2017Uncategorized

We must confess, we have not reviewed the financial documents and application to the Department of Transportation (DOT) that was submitted by the airport to justify the concept of privatization of the airport. So our comments and opinions which follow are our personal and anecdotal at best but perhaps there might be kernels of “wisdom” to be considered.

As reported in The Hill.com on April 25, 2017, “The Department of Transportation (DOT) has accepted St. Louis’s preliminary application to privatize its airport operations, the agency announced Monday.

St. Louis said in its application that airport privatization would help boost Lambert International Airport, which is a medium hub airport, as well as the region. The city hopes to maximize additional parking revenue and increase cargo revenue by using additional land assets.

The Federal Aviation Administration’s (FAA) airport privatization program enables airports to use private capital for infrastructure improvements by selecting a private operator, negotiating an agreement and submitting a final application to the FAA for approval.“Today’s announcement to accept the St. Louis Lambert International Airport’s preliminary application to participate in FAA’s Airport Privatization Pilot Program demonstrates the administration’s commitment to leveraging innovative financing strategies to revitalize our nation’s aviation infrastructure,” said Transportation Secretary Elaine Chao.

“As we’ve already seen in San Juan, this approach to airport management increases productivity, revenue and operating efficiency for airports, creating greater access to capital for infrastructure needs.”

For the most part if you will study the aftereffects of privatization of essential government services or facilities (which include toll roads, power plants, and now airports) you will note in nearly every instance of privatization that fees and charges have increased, and some increases have been dramatic. There are those that argue this is exactly what has occurred for the Chicago Toll Roads.

Perhaps the San Juan Airport privatization is an excellent model to study the effectiveness of such a change. Again, we’ve not reviewed enough data about the San Juan Airport privatization form an opinion as to whether it’s claimed privatization success is truly a “success” in most aspects. So many questions need to be asked and researched: 1) What was the “condition” of the airport, its infrastructure, its facilities, at

the time of privatization? 2) What were the financial alternatives to funding the necessary needed improvements both current and ongoing? (Of course it’s widely known that the Puerto Rican Territory is for all practical purposes bankrupt so government funding by the territory was certainly not an option. And because of this perhaps Privatization was the only option available?)

The argument FOR privatization is mainly that the infrastructure being purchased by the private sector will continue to be maintained and improved at lower or no cost to the taxpayer (if government owned).

One can only wonder if this privatization effort which is being pushed by the private sector and cash strapped government really is for the best, the best for the users, the best for those that foot the bill – the taxpayers, the best for service and facilities.

There are those that argue that he central government services such as rubbish removal, electrical utilities, waste water and sewer utilities, etc. should be left to the government or quasi-government sector, or at the very least a “monopoly” operator to assure the balance of providing the necessary services at a cost structure to the user which results, those who believe in this, in a moderated charge to the end-user, the public, you and me.

The announcement comes as the Trump administration seeks to leverage more money from the private sector to help upgrade U.S. roads, bridges and airports. President Trump’s proposed $1 trillion infrastructure package is expected to focus heavily on public-private partnerships.

And Trump has also called for separating air traffic control from the federal government and handing it over to a nonprofit or nongovernmental agency. There surely is no shortage of arguments on both sides of this question! If air traffic control was privatized would it have been modernized more quickly, resulting in a large increase in air traffic efficiency, resulting in more cost savings, but certainly someone has to pay for those improvements and if it’s not the taxpayer, then it’s the private sector in the private sector operates on a profit model as it should. So please “stand by and hold” for newly proposed user fees or taxes or some other collection model . . .

There is no easy answer.

 

 

Helpful Links – http://thehill.com/policy/transportation

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