Midway Airport Cuts a Privatization Deal ...

... which in time could prove a watershed moment in U.S. airport history, or be a one-off. The City of Chicago announced the deal this week in which it expects to receive $2.5 billion for a 99-year lease of Midway to a group that includes Citigroup’s Citi Infrastructure Investors unit; John Hancock Life Insurance Company; and YVR Airport Services, Ltd. The move falls under an FAA pilot program for U.S. airport privatization and still must get the agency’s approval. However, DOT Secretary Mary Peters is quoted as calling this “a very good deal.†For many who work in the U.S. airport arena, this is viewed as little more than legalized revenue diversion, which is a concern. It’s reported that Mayor Richard Daley plans on using some $1.4 billion to pay off Midway debt. Much of the remaining $1.1 billion is expected to be used to boost pension funds, but it’s reported that the mayor will reap some $100 million for city coffers. Perhaps the most interesting aspect of the arrangement is the involvement of YVR Airport Services (YVRAS), which is partially owned by the operator of Vancouver International Airport, recognized as a leader in bringing technology to the airport and in creative private development. YVRAS currently owns or operates some 18 airports on three continents. George Casey, president of YVRAS, recently related that he sees potential for more privatization initiatives in the U.S. market once a “cornerstone†airport makes the move. Midway is seen as that cornerstone. In Chicago, the move is seen largely as one that will result in higher fees at Midway. Mayor Daley, who has already led similar privatization initiatives with the Chicago Skyway toll road and the city’s parking garages, is positioning it as a creative way to bring private money to the city and the airport. Either way, the path to U.S. airport privatization is now officially open for business. Thanks for reading. jfi