U.S. Transportation Secretary Elaine L. Chao Announces St. Louis Lambert International Airport’s Acceptance Into FAA Airport Privatization Program
Monday, April 24, 2017
WASHINGTON – Transportation Secretary Elaine L. Chao announced today that the Federal Aviation Administration (FAA) has accepted the City of St. Louis’s preliminary application for St. Louis Lambert International Airport to participate in the agency’s Airport Privatization Pilot Program. Lambert is the second medium hub airport to join the program, which has slots for a total of 10 airports.
“Today’s announcement to accept the St. Louis Lambert International Airport’s preliminary application to participate in FAA’s Airport Privatization Pilot Program demonstrates the administration’s commitment to leveraging innovative financing strategies to revitalize our nation’s aviation infrastructure,” said Secretary Chao. “As we’ve already seen in San Juan, this approach to airport management increases productivity, revenue and operating efficiency for airports, creating greater access to capital for infrastructure needs.”
The airport privatization pilot program is designed to allow airports to generate access to sources of private capital for airport improvement and development. With the approval of Lambert Airport, the City may select a private operator to manage the airport, negotiate an agreement, and submit a final application to the FAA for approval. The program allows states and municipalities to leverage long term assets to address today’s infrastructure needs.
“The privatization pilot program was designed to encourage innovative financing solutions, and we’re pleased that an increasing number of airport operators are participating,” said FAA Administrator Michael Huerta.
White House Special Assistant to the President for Infrastructure Policy DJ Gribbin said, “We congratulate DOT for this accomplishment, and look forward to continuing our work with them to modernize our nation’s infrastructure and ensure an airline system that works on behalf of all Americans.”
The private operator of an air carrier airport may receive Airport Improvement Program grants and collect Passenger Facility Charges. Under the program, private operators of a medium hub airport such as Lambert are entitled to the same level of grant participation as public sponsors: 75 percent federal and 25 percent local. AIP discretionary grants for private operators are 70 percent federal and 30 percent local.
Upon being notified of the FAA’s acceptance, Saint Louis Mayor Lyda Krewson said, "This is a great opportunity to explore a public private partnership for the airport. I appreciate their consideration of our application and look forward to working with the FAA throughout the process, but as always, the key is in the details."
FAA Airport Privatization Pilot Program
The airport privatization pilot program is designed to allow airports to generate access to sources of private capital for airport improvement and development. The 1996 Reauthorization Act, Title 49 United States Code §47134, authorized the Federal Aviation Administration (FAA) to establish the pilot program. The 2012 Reauthorization Act increased the number of airports that could participate in the program from five to 10. The same restrictions on participation apply.
Only one large hub airport can participate in the program, and one of the airports must be a general aviation airport. Commercial service airports can only be leased and general aviation airports can be sold or leased. Most commercial service airports in the United States are owned and operated by local or state governments. Public-use general aviation airports are both publicly and privately owned.
St. Louis Lambert International Airport (STL)
St. Louis Lambert International Airport (STL) is a medium hub airport in St. Louis, Missouri, owned and operated by the City of St. Louis. The airport is located about 10 miles northwest of St. Louis and is the largest airport in the State of Missouri. The airport has four runways, and the dominant carriers are Delta and Southwest Airlines. Several other airlines also provide service, including American, United Airlines and regional carriers.
The City said in its preliminary application that it thought airport privatization would be good for the airport, the City, and the Metro region. Their goal is to create Public-Private Partnerships that would use innovative ideas to improve airport operating revenues with a private operator. Some of the ideas include maximizing additional parking revenue and increasing cargo revenue by utilizing additional land assets. The City anticipates that this venture would expand regional economic development and align with other multi-modal transportation projects, such as highways and rail to support airport infrastructure.
Status: The FAA accepted the City’s preliminary application to participate in the program on April 21, 2017.
Proven Medium Hub Success in Privatization Program
The FAA approved the Puerto Rico Ports Authority’s final application for the Luís Muñoz Marín International Airport on February 25, 2013, marking the first time a medium hub airport was privatized. To date, it has made strategic investments that have improved the passenger experience. As a result, traffic is growing, the airlines know their costs and they have a good relationship with the operator. San Juan is an excellent example of the Airport operator, Airlines, the Federal government working together to improve the operation of the Airport.
As of December 31, 2016, Aerostar’s capital expenditures were $176,224,426.23. These capital expenditures included the complete rehabilitation of Terminal B and C, the enhancement of the Terminal A Checkpoint, the construction of a new Central Checkpoint, the installation of a new Baggage Handling System, as well as twenty-one (21) new Passenger Boarding Bridges. The work also included updating, repairing and replacing elevators, escalators, lighting system, landscape and signage; a new passenger display information system for all the terminals, the development of the Runway 8/26 safety area and the refurbishment of Taxiway Sierra, among others.
Aerostar’s effective contract management and partnership lead to the transition of the Aircraft Rescue and Firefighting Department (“ARFF”) from the Puerto Rico Ports Authority to Aerostar, for which Aerostar purchased three (3) new fire trucks making the airport safer and more reliable. The investment for these new fire trucks was of $1,190,050.83.
Find more information on the FAA’s Privatization Pilot Program HERE.