St. Louis Pulls Bid to Privatize its Airport

St. Louis Pulls Bid to Privatize its Airport

January 24, 2020  | Robert Puentes

In the late 1990s, the St. Louis Lambert International Airport was the nation’s 15th-largest, with more traffic than Seattle-Tacoma, New York LaGuardia, or Charlotte Douglas. Lambert was once the home of Trans World Airlines (TWA), but after that company’s financial health declined, many flights were moved to other larger airports in Chicago and Dallas. Daily operations by air carriers averaged about 1,000 takeoffs and landings per day in 1997, compared with just 350 in 2016. The airport now suffers from excess capacity.

In 2017, the city of St. Louis applied to include Lambert in the federal Airport Privatization Pilot Program. The APPP was created in 1996 to foment airport privatization in the United States though, technically, commercial airports like Lambert can only be leased out. The first airport in the United States to be privatized under the APPP was Stewart International, north of Manhattan but the deal struggled from the outset, and the Port Authority of New York and New Jersey took it over in 2007. Today, only one U.S. airport—Luis Muñoz Marín Airport in San Juan, Puerto Rico—is privatized.

Despite its recent traffic decline, Lambert is generally considered to be a very well-run airport, and enplanements have steadily risen since the 2009 nadir. Nevertheless, the city believed a private partner would help bring in more revenue from non-aeronautical, cargo, and adjacent land, which would boost the regional economy.

In addition, the city explicitly wanted to secure an upfront payment from a private partner and then use that revenue for projects elsewhere in the city, a process known as asset recycling. The city’s application stated that it expected to “free up more than one billion in capital” for non-airport uses. The St. Louis mayor at the time specifically mentioned the North-South MetroLink light-rail expansion as a project that could be funded with proceeds from the lease. The next mayor “adopted the privatization effort as her own” and in 2018 selected an advisory team for the proposal and worked to clear several hurdles, including securing support from the city boards and gaining airline approval. Detractors asserted that recent bond rating upgrades indicate that the airport is already well operated, and the city could lose control over how the airport is run under privatized lease.

In late 2019, after 18 potential bidders expressed formal interest in submitting proposals, the Mayor abruptly ended the city’s privatization plans. In doing so she cited opposition from the general public and the regional business community. At the same time, groups of labor and community activists continue to call for privatization as a way to make airport improvements, and generate jobs and revenue without raising taxes. While the federal application is not officially withdrawn, last week city officials voted unanimously to stop the process.

It does appear that the primary impetus for the effort was to extract airport value for other city infrastructure projects rather than solving any specific airport-related problem. While asset recycling can work, it is still relatively untested in the United States. That does not mean St. Louis should not experiment with such an approach, but it is unclear if such an arrangement would address the airport’s operations any better than the current arrangement.

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