Austin Ponders Leasing its Airport

Mayor Wynn: "Why not explore a sale or a long-term lease that could net us hundreds of millions of dollars upfront that we could put toward any number of community needs, such as transportation?"

City of Austin officials are considering leasing out the city's eight-year-old airport, a transaction that could bring a windfall of several hundred million dollars but would also put control of a key city service in private hands.

City Manager Toby Futrell has been sounding out council members in one-on-one meetings and has suggested that the council be briefed as a group in executive session in the coming weeks.

Such an arrangement, even if a council majority goes for it, would face myriad legal and political hurdles and would probably not occur anytime soon. And it's unclear how a private lease might affect ticket prices, parking fees, the future of the about 320 city airport employees or other airport services.

Mayor Will Wynn, at least, is convinced that the city should unload Austin-Bergstrom International Airport.

The airport's revenue was $9.6 million above its expenses last fiscal year, city Aviation Director Jim Smith said, and the city has averaged $8.9 million in net income annually since 2001. But federal law prohibits the city from using that money outside the airport site, instead requiring that it be plowed back into airport improvements.

Governments nationwide have been entertaining offers for toll roads, state-run lotteries and airports from foreign investors awash in cash. Futrell said the city has received no airport lease proposal, verbally or in writing.

Wynn said he has been lobbying his council peers for several months on the subject, picking up on a move by Chicago Mayor Richard Daley to lease that city's Midway Airport.

"There's no financial reason whatsoever for the city to own the airport, as by law we can make not one penny from its operations or even property rentals," Wynn said Tuesday. "So why not explore a sale or a long-term lease that could net us hundreds of millions of dollars upfront that we could put toward any number of community needs, such as transportation?"

A sale is not an option, however.

Chicago and a handful of other cities have pursued putting airports in private hands under a 1996 federal pilot program allowing up to five U.S. airports to be leased. Chicago, which began the process at least a year ago, has applied to the Federal Aviation Administration but has not been approved yet, said Robert Poole, transportation studies director for the Reason Foundation, a libertarian think tank. Under that program, a city can't lease its airport to a private company unless the FAA and 65 percent of airlines using the airport agree.

Airlines in the U.S. generally have been leery about privatization, fearing increased costs and less sway over airport expansion.

One airport, Stewart International Airport, north of New York, went private in 1999 under that program. But Poole said the British company that leased the airport decided last year to put its long-term lease on the market. Ironically, the latest buyer was a government entity, the Port Authority of New York & New Jersey.

Overseas, airport privatization has become the rule rather than the exception in recent years. According to an analysis by Poole, most large United Kingdom airports have gone private, along with airports in Hamburg and Frankfurt, Germany; Rome; Naples, Italy; Sydney, Australia; and Brussels, Belgium. Paris airport authorities have sold off a minority stake in the city's two major airports.

The Rome airport went for about 2.7 billion Euros, or about $3.5 billion at today's exchange rate.

Smith, the aviation director, said customers around the globe have given mixed reviews to privately run airports.

"Some of these privatizations have been a success, where the airport has become better from the community's perspective," Smith said. "And there's an equal number of examples where it's gotten worse."

He noted that the highest- rated international airports - in Seoul, South Korea; Hong Kong; and Singapore - remain in government hands.

This content continues onto the next page...

We Recommend