Houston to Quito ... and beyond

Airport system looks to generate revenue, new opportunities by exporting its expertise

HOUSTON — Officials from the Houston Airport System and its sister organization, the HAS Development Corporation (HASDC), are actively involved in the management of the Quito, Ecuador airport as well as the construction of a new airport to serve that nation’s capital city. That experience has led officials here to pursue becoming a central player at airports worldwide, seeking new development and management opportunities. At the same time, the move is creating new experiences for staff at HAS, which in turn builds on the breadth of knowledge available for future projects offshore.

Comments Richard M. Vacar, A.A.E., director of both the Houston Airport System and HASDC, “Right now what it boils down to is, we’re ready to fly. The revenue potential is the equivalent of what’s going on at DFW with their gas deals; it’s that big.”

Adds Robert C. White, vice president of airport services for HASDC, “We’ve got the nucleus of expertise of the Houston Airport System to put behind this privatization program. The future of airport privatization is going to be having qualified airport operators as part of the consortium.”

Both Vacar and White credit their past experience working for Lockheed Air Terminal, one of the original airport privatization groups in the U.S.

Comments White, “What we’re finding is, the privatization of airports is going into a second generation of how it works. What they found was they were able get facilities built using privatization in the past, but they didn’t emphasize the operator portion. So, once the airport was up and ready to operate, they either didn’t know how to operate it or they did it poorly in terms of generating revenue and really maximizing what that new investment was all about. It was sort of like an afterthought.”

In November, the group hired Gary Lantner to serve as president of HASDC, replacing Jeff Scheferman, who now heads up a new division, ADC&HAS, which is tasked with flushing out new opportunities such as Quito. Lantner’s background includes time at the Port Authority of New York & New Jersey, Massport, and five different airlines.

“Bob and I are at HASDC; ADC HAS, which is run by Jeff, is the privatization airport group,” explains Lantner. “That’s the group that was started in May, as we began to unbundle ourselves.

“We clearly have the mission of offering consulting and training; they have the mission of setting up and operating airports. They will come to us to rent Bob if they need to. They’re the first point of contact in sniffing out a deal.”

A complex beginning
Vacar explains that HAS got interested in broadening its scope to other airports in 1998 when it got a phone call from mega-contractor Bechtel, which was pursuing a bid related to the privatization of Mexico’s airports.

“I went to the city council and the mayor and got approval that if we did win the bid, to be able to set up a corporation to protect the city from liability and get involved with this thing,” recalls Vacar.

The bid ultimately fell through, he says, after the Mexican partners in the proposal fell short of financing.

“But word got out that Houston was very willing to be a player in these deals. We started getting calls from literally all over the world,” he says.

“A particular project popped up pretty much right away with Airport Development Corporation in Toronto. They had some partners in Brazil and Canada that wanted to operate the Quito, Ecuador airport, and build a new airport to replace it.

“ADC came to us, like Bechtel did, and wanted us to be the technical advisers on it. That’s all we would have been doing there was consulting — before 9/11. After 9/11, investment capital for privatization basically came to a halt.

“We were the only U.S. participant in this consortium. We negotiated a deal where we would get an ownership interest, what they call carried interest — meaning we didn’t have to invest directly — in the Quito project if we wanted, if we would apply to OPIC [Overseas Private Investment Corporation] to get loans, which we did.

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