New Orleans drops plan to privatise airport

The city cited ‘conditions required to effectively privatise public infrastructure and the current state of capital markets’ as reasons why it would no longer seek private bidders for Louis Armstrong International Airport. The decision opens up a slot for another city to privatise its airport under a pilot privatisation programme run by the Federal Aviation Administration.

New Orleans is no longer looking to privatise its city-owned airport, Louis Armstrong New Orleans International Airport.

“After analysing the conditions required to effectively privatise public infrastructure and the current state of capital markets, it has been concluded that New Orleans is not well positioned at this point in time to solicit bids for privatising the Louis Armstrong International Airport,” the city’s aviation board said in a statement.

In 2008, the airport served 3.9 million passengers, according to the Federal Aviation Administration (FAA).  Nine airlines provide scheduled passenger service to Louis Armstrong, which in  August 2009 filed a preliminary application with the FAA to privatise its operations under a pilot privatisation programme.

New Orleans’ withdrawal from the programme opens up a slot for another airport to take its place. Established in 1996, the FAA’s pilot privatisation programme allows only five airports to privatise their operations. Including New Orleans, all five slots had been committed as of this month and the FAA said it established a “standby list” for others in case a slot opened up.

It is unclear which airport will take New Orleans’ place. However, legislators in Minnesota have previously suggested privatising Minneapolis-Saint Paul Airport and Los Angeles has considered privitising one of its secondary airports, Ontario International Airport.

The other four airports cleared to participate in the FAA’s pilot privatisation programme include:

– Midway International Airport in Chicago;
– Briscoe Field in Gwinnet County, Georgia (a secondary airport serving the Atlanta region);
– Luís Muñoz Marín International Airport in Puerto Rico (the island territory’s main airport);
– Hendry County Airglades Airport in Clewiston, Florida (a small airport northwest of Miami).

At 17 million passengers, Chicago’s Midway is by far the largest participant in the programme. The airport attracted a $2.5 billion offer from a Citi-backed group of investors in 2009 but the deal failed to reach financial close. Since then, Chicago has been waiting for the right time to re-bid the airport.

So far, only one airport has ever successfully completed the pilot privatisation programme: Stewart Airport in Newburgh, New York. Stewart was leased to UK transport provider National Express Group for 99 years in 2000. But six years after the transaction, the concessionaire put the 99-year lease on sale and eventually the state repurchased it for $78.5 million.

Three other airports have withdrawn from the pilot privatisation programme, according to the FAA website, and another, New Orleans Lakefront Airport, terminated its application in 2008.

Chicago is due to provide the FAA an update on its plans to privatise Midway by 30 November.