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St. Louis gets federal approval to explore airport privatisation

The Department of Transportation gave St. Louis approval to explore airport privatisation as part of President Trump’s plan to increase private sector infrastructure participation.

The City of St. Louis has received approval from the US Department of Transportation to explore privatising its government-owned airport.

A completed sale would make St. Louis Lambert International Airport the second major US airport under private management after Luis Muñoz Marín International Airport, in Puerto Rico. The decision to allow St. Louis to explore privatisation is seen as a move from President Donald Trump's administration to test investor appetite for more involvement in US infrastructure.

The DOT's approval is authorised under a 1997 Federal Aviation Administration provision that allows for up to 10 airport privatisation projects.

Airports are considered high-value assets among infrastructure investors, but there has been little movement in the US toward privatisation due to public opposition and the availability of cheap municipal bonds. In 2008, a deal to sell Chicago Midway International Airport for $2.5 billion under a 99-year lease fell apart because investors could not secure financing.

In 2013, the first major airport in the US – Puerto Rico's Luis Muñoz Marín International Airport – was privatised when US regulators and Highstar Capital, now owned by Oaktree Capital Management, and Group Aeroportuario del Sureste SAB de CV agreed to a $2.6 billion lease.

Trump has signalled the private sector will play a large role in his plan to invest $1 trillion in infrastructure over 10 years. He has named to a strategic and policy advisory group several business leaders active in the infrastructure industry, including Global Infrastructure Partners chairman Adebayo Ogunlesi and Blackstone chief executive Stephen Schwarzman.

Transportation Secretary Elaine Chao said in a statement the DOT's approval “demonstrates the administration's commitment to leveraging innovative financing strategies to revitalise our nation's aviation infrastructure.”

“The privatisation programme was designed to encourage innovative financing solutions, and we're pleased that an increasing number of airport operators are participating,” FAA administrator Michael Huerta said.

The next step toward airport privatisation for St. Louis is for its government to select a private operator to manage the airport and negotiate an operations agreement.