In what may be an important signal about how $1 trillion of infrastructure spending will be financed and implemented, the U.S. Department of Transportation (DOT) today has given the city of St. Louis the go-ahead to explore selling the city-owned airport to private owners in a Public-Private Partnership (P3). The airport badly needs modernization and upgrades yet funding has been stalled from governmental sources. Estimates of the financial investment were not provided with the announcement yet recent airport privatizations have typically resulted in billions of dollars of investment at major airports.
In 2016, the final consortium for the modernization of LaGuardia Airport in New York was announced. The winning LaGuardia consortium consists of Vantage Airport Group, development firm Skanska USA Inc., architecture and engineering company HOK as well as investment firms including Morgan Stanley and Citigroup Inc. and others. The LaGuardia consortium is estimated to invest $3.6 billion to $4.0 billion in much needed upgrades to the airport.
The idea is not new, in fact the law to allow privatization of 10 U.S. airports was passed in 1996. The privatization movement didn’t go anywhere because without extensive giveaways, tax breaks or regulatory and management changes, there was little or no interest. Politics ruled. The projects which were explored fell through due to lack of financing and political environment. The airline industry has always been fraught with challenge as it is extremely cyclical and cost sensitive.
“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 DOT Secretary Elaine 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 Trump administration clearly is showing its desire to help unleash private investment into infrastructure with this announcement. More approvals are expected in order for the Trump goal of $1 trillion dollars of infrastructure investments over the next ten years to be met.
Trump’s DOT is taking Bold Action pushing through these approvals and setting the stage for a significantly different and exciting period for infrastructure. Unleashing private capital to fix U.S. infrastructure problems is a Bold Idea. Getting the regulatory approvals and environment right are Bold Actions. Bold Impact for travelers is sure to follow.