Washington, DC—The Eno Center for Transportation released on Wednesday a report examining efforts to privatize U.S. Airports. Deal or No Deal: Prospects for Airport Privatization in the United States finds that circumstances unique to the United States greatly limit the usefulness of privatization in solving airport problems.
The report is timely: this Spring, the U.S. House of Representatives passed a reauthorization of the Federal Aviation Administration (FAA) that makes several changes to the Airport Privatization Pilot Program (APPP). The changes include removing the participant cap, currently set at 10 airports, and allowing multiple airports to apply under one sponsor, such as the Metropolitan Washington Airports Authority which oversees Reagan National and Dulles Airports. The Trump Administration has proposed to privatize Reagan and Dulles airports, as well as other government assets, in its infrastructure proposal. The Senate is expected to take up FAA reauthorization in the coming weeks.
“While Congress debates fixes to the airport privatization program, it’s important that policymakers first understand the specific policy challenges they’re trying to solve rather than merely supporting any privatization effort for ideological reasons,” said Robert Puentes, President and CEO of Eno. “We hope this report will inform the discussion around airport privatization and shed light on the circumstances that make privatization efforts successful or unsuccessful.”
The report examines five of the eight U.S. airports that have attempted to privatize under APPP, passed by Congress in 1996. Despite these attempts, the only successfully privatized airport in the United States. today is Luis Muñoz Marín (LMM) Airport in San Juan, Puerto Rico.
Deal or No Deal finds several likely reasons for why airport privatization has stalled in the United States, including regulatory hurdles, robust existing revenue streams, and a lack of market incentives for airports to find efficiencies. Privatization should be one of the many tools that airport authorities have at their disposal when tackling challenges. The paper recommends that policymakers first need to clearly understand the problem they are trying to solve – whether it is needed upgrades to runways and terminals or otherwise – and then decide whether privatization is the best approach.
Read the report here.
