Privatising US airports ‘does not solve any specific problem’

The Eno Center for Transportation argues ‘privatisation for its own sake is bad public policy’ but is not averse to public-private partnerships when appropriate.

A Washington, DC-based think-tank has thrown cold water on the hopes of investors calling for the privatisation of US airports, saying that such a move “does not solve any specific airport problem”.

The Eno Center for Transportation said in a report that airport “privatisation for its own sake is bad public policy”, but governments should have it as an option for when the situation calls for it.

Eno’s main arguments against full airport privatisation are that public airports and their operators can take advantage of tax-exempt public bonds, which have no federal cap on borrowing amounts, and the public sector’s unfamiliarity working with private investors on these deals.

“The aviation industry should build on their structural strengths, including robust revenues, access to tax-exempt borrowing, and experience engaging with the private sector, to improve airport conditions using PPPs and other tools,” the report states.

Private ownership of airports, which is more common outside of North America, has long attracted the interest of long-term investors. Such assets generate steady returns for decades and have multiple ways of bringing in money, from airline contracts to retail shopping.

In the US, federal, state and local governments have considered the idea of moving some airport assets over to the private sector. The Airport Privatisation Pilot Programme was launched in 1996 to facilitate these types of transactions, and President Donald Trump included in his $1.5 trillion infrastructure plan earlier this year two DC-area airports that could one day be sold.

The Eno report states that most privatisation efforts today are rooted in asset-recycling efforts, when governments sell control of public infrastructure assets to private owners and reinvest proceeds in new projects. This can provide a net gain but does not solve many of the problems facing US airports, according to Eno.

“If seeking to increase competition, decrease costs and improve management, airports already have a host of tools at their disposal,” the report states.

Eno canvassed five US airports that have applied to the APPP, including the lone facility to be approved, the Luis Marin International Airport, in Puerto Rico, the US’s only private airport. Its report also looks at two airports in which governments either pulled their APPP application due to lack of public support for privatisation or because the private owner wished to break its lease. Two other examples focus on airports currently navigating the APPP’s approval process.

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