Lack of public support forces St Louis to cancel airport PPP

But interest from the private sector was strong with 18 firms expressing interest in operating Lambert airport under a PPP agreement that would have generated $2bn in net proceeds for the city.

Opposition from residents, business leaders and elected officials to the City of St Louis’ plans to privatise Lambert International Airport has led to its cancellation.

In a letter to a working group exploring the plan, St Louis Mayor Lyda Krewson said stakeholders had raised “concerns and apprehension” about leasing away Lambert and “the possibility that a private entity might operate our airport”.

Krewson’s decision to end the nearly two-year process came shortly before the working group was expected to vote on whether to issue a request for proposals. The mayor had been in favour of the effort, and its projected $2 billion in net proceeds and $600 million of cancelled debt, but acknowledged airport public-private partnerships are not common in the US, and “being ‘first’ at anything brings inherent risk and scepticism”.

Still, Krewson said, Lambert has $900 million of projected capital needs over the next 10 to 15 years.

A spokesman for Krewson’s office did not respond to a request for comment.

Darlene Green, who, as comptroller for City of St Louis, Missouri, was part of the Airport Advisory Working Group, said she supported Krewson’s decision to stop the PPP process and had opposed airport privatisation “from the very beginning”.

At least 18 companies had submitted requests for qualifications, including private equity firms Global Infrastructure Partners and AMP Capital, Vantage Airport Group and the Canadian pension fund Ontario Municipal Employees Retirement System.

Krewson’s predecessor, former St Louis Mayor Francis Slay, began exploring leasing Lambert in April 2017 when he applied to participate in the Federal Aviation Administration’s Airport Investment Partnership Programme, aimed at exploring airport privatisation “as a means of generating access to various sources of private capital for airport improvement and development”, according to the FAA.

A Fitch Ratings report released on Thursday said that abandoning the effort to lease Lambert to the private sector “evidences the difficulty” of airport privatisation in the US. The report said “reaching consensus with key stakeholders and determining the value for both the city and for equity investors under a long-term lease are central challenges in these transactions”.

According to Fitch, Lambert airport is a “self-supporting” enterprise funded entirely by user fees and federal grants and not supported by taxpayers.

While full privatisation of airports is not common in the US, PPPs have been used more recently for redevelopment and upgrades. Examples include the LaGuardia and JFK redevelopment projects in New York; and the Automated People Mover, a light rail-type system at Los Angeles International Airport.

Denver International Airport was also due to get a new terminal under a PPP agreement, but the city and county of Denver pulled the plug on that project after having awarded the contract to a private consortium due to construction delays and related disputes.