May 31st 2017 | Posted in Public-Private Partnerships (P3) by Kristin Gordon

Shifting air-traffic control from the Federal Aviation Administration (FAA) to a private partnership is part of President Donald Trump’s proposed budget that was introduced last week. Critics say it isn’t a good idea because of the lack of congressional oversight. In 2015, members of the House Committee on Transportation and Infrastructure and Subcommittee on Aviation were requested to review the causes of recent disruptions and whether the FAA possesses the ability to manage air traffic control crises that arise within the National Airspace System. In January, the Office of Inspector General released an audit report that stated “although FAA has taken steps to improve its operational contingency plans, significant work remains to mitigate the effects of major system disruptions.”

One of the examples of these disruptions provided in the 23-page audit occurred in 2014 when a communications contractor assigned to the Aurora FAA radar center set fire to the center, grounding more than 2,000 flights in Chicago. The contractor allegedly planned  to “take out” the center and kill himself. The contractor was charged with setting fire to and damaging an air navigation facility. The audit stated that the “FAA’s air traffic facilities are not yet fully prepared to respond effectively to major system disruptions, in part because of a lack of necessary controller training for these types of emergency events.” Congress will debate the possible change as part of renewing the reauthorization of FAA funding, whose current spending authority expires on Sept. 30.

But, privatizing airport operations has been flying along at full speed since 1997 when Congress established the Federal Aviation Administration’s Airport Privatization Pilot Program. The pilot was initiated to explore privatization to a maximum of five airports as a means of generating access to various sources of private capital for airport improvement and development. In 2012, the Reauthorization Act increased the number of airports from five to 10. As of April 2017, there are four airports in the privatization program: Hendry County Airglades Airport in Florida, Luis Munoz Marin International Airport in Puerto Rico, St. Louis Lambert International Airport in Missouri and Westchester County Airport in New York.  Airport privatization is nothing new outside of the U.S. The British Airports Authority was privatized in 1987 and airport facilities have been sold and leased in numerous countries, including Australia, Bolivia, Canada, Chile, Costa Rica, Cyprus, Germany, Greece, India, Mexico, New Zealand and Peru.

Once an airport is granted approval by the FAA to seek privatization, a bid is requested from private entities to develop proposals that include details of how they will develop and operate the airport or airport system over a long-term concession period, given their experience and expertise.  Infrastructure experts and advocates of public-private partnerships (P3) tend to see airports as the ideal candidates for the model’s application, because there are so many potential sources of revenue.

According to a Congressional Research Service study released last year, interest is lacking on P3s based on a several-year-long application process, restrictions on how much airports can increase rates and charges, and tax privileges for public bonds that make long-term financing costlier for the private sector.

The San Juan’s Luis Muñoz Marín airport is an example of a successful P3 and the facility has stuck with the airport privatization pilot program the longest. It entered into it in 2009, as a way to revive a lagging investment and help chip away at the $800 million of debt held by the Puerto Rico Ports Authority. Some cities and states are testing out their options on whether it would be feasible to become privatized.

In June 2014, Illinois officials purchased the 288-acre Bult Field with its 5,000-foot runway on Kedzie Avenue in Monee for $34 million, which was within the footprint established for a 5,800-acre airport. The Illinois Department of Transportation (IDOT) requested information from private businesses last month to see if any were interested in developing the South Suburban Airport in a P3, noting that the state was not interested in spending public money on the project. Six private firms have expressed interest in building and operating the airport. IDOT is now producing an Airport Master Plan for FAA review and approval.

Most airports remain under the ownership of a state, county or city, and several are attempting a new evolution in airports. The Tampa International Airport in Florida plans to spend more than $2 billion by 2026 on improvements and new amenities in the terminals and around the airport property as part of its master plan overhaul. Airports wont be just a place to park, get a snack and board a flight anymore. These transportation facilities are adding new development around their structures so people can work, sleep, dine and shop, even if they aren’t taking a flight. Tampa’s $543 million phase two of the Tampa’s International Airport’s master plan includes a 17-acre commercial development for two hotels, an eight-story, 240,000-square-foot office building, a 20,000-square-foot retail strip, a gas station with a convenience store and possibly a pet hotel. It will be located next to the economy parking garage and accessible to the main terminal through the airport’s people mover train, which will be completed later this year.

The Port of Bellingham in Washington owns and operates the Bellingham International Airport (BLI), which is a small non-hub airport serving the city of Bellingham, County of Whatcom, County of Skagit, County of Snohomish and the Lower mainland of British Columbia, Canada. BLI serves a market of more than 1.4 million potential customers within a 60 mile radius. Since 2004, BLI has experienced significant growth in passenger enplanements resulting in the airport needing to update its’ growth projections multiple times to meet FAA requirements.  In 2014, the airport completed a $38.5 million terminal expansion project, expanding its main passenger terminal from 27,000 square feet to 104,000 square feet. Future projects include additional commercial aircraft parking and the long-term development of commercial facilities. The Port of Bellingham, Wash. is requesting statements of interest and qualifications from professional firms experienced in the retention and development of commercial airline air service for BLI. The deadline for proposals is June 23.

The City and Borough of Juneau, Alaska is requesting proposals from qualified consultants to provide a design for Taxiway-A rehabilitation and Taxiway-E realignment at the Juneau International Airport.

A study was performed on the airport and recommendations for several improvements were made that include the following: rehabilitate pavement on Taxiway-A, reconstruct shoulder pavement on Taxiway-A, rehabilitate taxiway edge lighting system, widen former Taxiway-H (for aircraft circulation during construction), replace Jordan Creek culvert beneath Taxiway-A, modify airfield drainage, realign Taxiway-E and geothermal pavement clearing. The airport has submitted an application for an Airport Improvement Program (AIP) grant to the FAA for design of the project. Future grant applications will be submitted for construction of the project. Proposals are due by June 21.

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