BACKGROUND

There are many reasons to privatize an airport. Beginning in the 1980s, many foreign countries began to privatize their national airports in an effort to save tax payer dollars, increase productivity and efficiency as well as reliability. One of the world's busiest airports, London's Heathrow, was privatized in 1987. This trend continues around the world and has prompted the Federal Aviation Administration (FAA) in the United States to also pursue privatization options for similar reasons. The FAA is now actively encouraging privatization.

Since 1958, when congress passed the Federal Aviation Act, one of the main goals and responsibilities of the agency has been to ensure that the United States has a safe and reliable air transportation network. At that time it was believed that one of the best ways to accomplish this was to guarantee adequate financing, from federal sources if required. Billions upon billions of federal dollars have helped build US airports around the country. However, the funds did not come without strings and the government attached a host of restrictions regarding how federal airport grants could be used. Most aviation professionals would agree that the FAA was successful in creating the worlds most reliable and safe air transportation network. But, a byproduct of the FAA's rules and regulations is the fact that many airports in the United States are breakeven at best. One of the reasons is because once an airport takes federal dollars they are then only allowed to reinvest any profit back into the airport.

Airports in the United States by and large are owned by government entities. Under current federal guidelines, when an airport is publicly owned, the restrictions and responsibilities associated are considerable and include:

The government entity owning the airport is ultimately responsible for its operation

Any revenue derived from airport operations cannot be diverted to other government services

Property taxes can only be collected from airport tenants but not the airport itself

Government overhead is increased

The government entity owning the airport is ultimately responsible for its sales, marketing and general upkeep

However, under the FAA Privatization program the merits of private ownership are significant and include:

Profits can be paid to government entities

Property taxes can be collected from the airport itself as well as tenants

Management with extensive private sector experience is attracted

More efficient operations ensue which translates to profitability

Private airports do not add to government overhead

In addition, under private operation very important government oversight functions remain which include:

FAA / TSA / EPA / EEO standards and oversight

NEPA requirements

Local zoning ordinances and state oversight