Garvey: ‘Bar was set high’ on airport privatisation

Relaxing the 15-year-old rules governing airport privatisation in the US is ‘a debate worth having’, according to Jane Garvey, a former head of the federal agency in charge of the programme. A bill in Congress would significantly liberalise the rules.

The time is now to rethink the rules governing the Federal Aviation Administration’s privatisation pilot programme, a former head of the regulatory agency told Infrastructure Investor.

Jane Garvey, a senior executive at fund manager Meridiam Infrastructure who headed the FAA at the time it launched the programme in 1997, said she was “a little surprised” at the slow pace of privatisation under its now 15-year-old set of rules governing the sale of public airports.

“I think the bar was set high because it was controversial at the time . . . and I know there was a lot of pushback among the airlines who were concerned about it, so the notion was you had to get a certain [approval] threshold,” Garvey said.

Jane Garvey

That threshold, set at 65 percent of the scheduled airlines serving the airport, has not proven impossible to meet. Chicago was able to convince Southwest, the main airline serving its Midway Airport, to let the airport participate in the programme in 2008 and, in 2000, New York leased its Stewart Airport.

However, building consensus to hit the 65 percent mark often takes time and resources, which, with the programme’s five-airport limitation on privatisation, can make it difficult for public airport executives to pursue such a transaction.

“They have to run an airport too and to do that at the same time as you’re pursuing that you really have to have a strong commitment,” Garvey said, adding: “I would think a good question would be: have we set the bar too high? Do we want to rethink some of these requirements?”

An FAA bill passed by Congress last week contains provisions that would relax the 65 percent threshold and require only a “consultation” with airlines serving an airport before any privatisation goes forward. The provisions would also double the size of the programme from five slots to ten.

Of the five spots currently allowed, only one remains available – a factor which may also chill airports interest in participating in the programme: “If there’s only one slot left,” Garvey said, “your risk-reward may not pay off”.

Garvey declined to predict how the Senate would react to the House’s version of the bill, but said revisiting the rules is “a debate worth having”.

The Senate has appointed conferees who will iron out the differences between the two bills. The conferees are:

• West Virginia Democrat John Rockefeller;
• California Democrat Barbara Boxer;
• Florida Democrat Bill Nelson;
• Washington Democrat Maria Cantwell;
• Texas Republican Kay Bailey Hutchison;
• Nevada Republican John Ensign;
• South Carolina Republican Jim DeMint;
• Montana Democrat Max Baucus;
• Utah Republican Orrin Hatch.