Clarification

WE have said now for two years to lease the airport similar to Newburgh, New York, who leases the airport to National Express. Here is brief summary from the home page, the term in privatization.

Privatization

In April, 1998, New York State selected the U.K. firm National Express to lease Stewart Airport for 99 years. Stewart thus became the first U.S. airport to be fully privatized and the first participant in the FAA’s airport privatization pilot program to complete the process.

National Express Group PLC offered $35 million in cash up-front, plus a percentage of airport revenues. Its bid was judged superior to those of the other four finalist teams: American Port Services (Baltimore), D.M. Airport Developers (Morristown, N.J.), Airport Group International (Glendale, Calif.), and LCOR / Schiphol Airport (New York City).

National Express, the former British government intercity bus operator, is also a privatized company. It was privatized in 1988 by the Thatcher government and went public on the London Stock Exchange in 1992. It has acquired bus operations in Europe and New Zealand and was a successful bidder for five of the 25 passenger rail franchises offered last year during the privatization of British Rail (including the Gatwick Express linking London to Gatwick Airport). It purchased two of the United Kingdom’s regional airports - Bournemouth and East Midlands - when they were privatized, and it recently was awarded a management contract to run the Subic Bay Airport in the Philippines.

In 1987, the British government kicked off the airport privatization trend by announcing the public sale of the British Airports Authority (BAA) , a government agency which owned and managed seven of the country’s largest airports, including London Heathrow, the world’s busiest international airport. A phenomenal 1.4 billion shares of stock raising 1.9 billion were sold to 2.2 million citizens in the initial public offering, and the newly privatized BAA remained as manager of the airports.

In addition to operating seven airports in the U.K., BAA operates several international airports. Its management of the airport in Sydney, Australia has been an unequivocal success, with improved efficiency, reduced costs, and increased employee and customer satisfaction. In the U.S., BAA manages Indianapolis International Airport under a subsidiary company BAA Indianapolis LLC.

Increasingly, airports are being viewed as enterprises, rather than as public services which are expected, at best, to break even. Around the world, governments in both developed and developing countries are turning to the private sector for airport management and development. Municipal and state governments in this country can use the private sector to improve airport operations in several ways.

For existing airports, the simplest form of privatization is contracting out management of the airport on a relatively short-term basis. Larger economic benefits can generally be obtained via a long-term lease or sale of the airport. Federal airport grant (AIP) funds for capital investment projects can be used at all types of privatized airports, but so-called entitlement grants (based on passenger or cargo volume) are only available if government retains underlying ownership of the airport (which still permits management contracting or long-term leases). Tax-exempt bonds may remain in place when an airport is privatized, and in some cases tax-exempt financing can be used for new airport privatization projects.

The benefits of a more entrepreneurial approach to airport management include increased operating efficiency, increased airport revenues, improved airport amenities, possible new revenue streams for state and local governments, and reduced risk of developing uneconomic (white-elephant) projects. Airlines, passengers, private-plane owners, and taxpayers can all benefit from this new approach to airport management.