February 03, 2007

Putting the Airport out to Bid

Ten years ago Stewart and Worcester were pretty similar airports. Today we read about Stewart and leases for 79 million, while Worcester bleeds money and will be leased to MassPort for what I guess will be a nominal amount. What was the difference? Management!!! In 1998, the State of New York privatized Stewart and leased it to National Express. You can read about it on the website under the privatization tab.

Over the past two years on this blog, I do not know how many times we have said SELL ORH and that the City of Worcester knows how to run an airport no more then it knows how to run a Civic Center (or a hospital). Now it seems everyone agrees with us. Unlike others, who try to rewrite history, look at #13 in our list of recommendations:

13) Invite airport management companies to Worcester and review the possibility of putting together an RFP whereby we lease the entire airport to a private management company.

In fact Bob Nemeth stopped by my office last January, 2005, after the web site went live on the airport and we discussed various matters concerning the airport. I told him that we should look into privatization of ORH like Stewart had done with National Express (there is a section on the web site about it towards the bottom). Mr Nemeth did not know what either privatization or wifi (another recommendation) was, so I had to explain both to him. In the end, he told me to submit my idea to the airport commission for their review.

Take a look at the Board Minutes and hit the February,2005 minutes, check out number 7 under new business. The Airport Board minutes says thanks for the recommendation but that IMG was looking into it already. What did IMG say about privatization in their $100,000 report?? Answer: Nobody would be interested in the airport so we should forget about recommendation #13,

My question has been all along is how can IMG say that without trying? IMG , by the way, are the same guys we have paid an additional $100,000 to recruit and retain a commercial airline--how they doing on this?? As Harry Tembenis, Jahn and many others have suggested there are possibilities and what do we have to lose to try? Is there not a fiduciary responsibility to get the highest possible return for the tax-payers?

Instead of attempting to sell the airport (long-term lease or outright sale), we spent monies on consultants and surveys that one of our own airport board members, Mr Nemeth, now says was a waste of time and is getting us nowhere. Think about it, had you ever heard of Stewart International Airport in Newburgh, New York, before reading this blog?? I did not, but now you read about a 79 million dollar lease from the Port of New York??

Lets hope Bob Nemeth has a part 3 to his recent story on the airport, as to why we never looked aggressively for a buyer other then MassPort. Eventually when we lease ORH for a nominal amount to MassPort, will this be fair market value??? Don't get me wrong, I personally believe that MassPort will be a huge improvement, but what did we leave on the table??

4 comments:

jahn said...

If Mr Nemeth publishes a piece that discusses why they ( Nemeth/commission) decided not to RFP/pritatize the entire airport, wouldn't it become apparent that there were in fact discussion of this topic, which discussions never made it into the Commission minuters?

Bill Randell said...

Jahn:

The answer will be, we left the decision up to IMG, whether we should have attempted to solicit an RFP for the entire airport (privatize). IMG said that there would be no interest and thus no RFP.

My question is why did we leave such an airport decision up to IMG. The same group that we have spent over $100,000 to retain and recruit an airline with no results.

It comes down to this. What did we have to lose to have an RFP for the entire airport? NOTHING!!!!

Take a look at National Express. they paid 35 million up front for Stewart and now Port of New York is offering 79 million. Think National Express made money on that??

Who knows maybe National Express, Eclipse, authority that owns Manchester/Providence/Bradley would have seen the advantage and opportunity that ORH could provide. Instead we deal only with MassPort.

Jahn said...

So If NY buys Stewart from National or takes it via eminent domain, then there is a possibility that Nat'l will be in the market for another airport and that they'll have $79M possibly burning a hole in their pocket.

You know I cannot believe some of the city's labor unions arent asking the same questions that you are? I.e. how many millions are we leaving behind with this Massport only strategy?

And..........with the EPA and DEP and community activists and who knows who else........well they just aint buildin' no more airports.

Bill Randell said...

Jahn:

You get it.

National Express made a 35 million dollars in a moribund Stewart Airport in 1998. Unlike ORH, they made things happen like Airtran and JetBlue.

Now they are going to have their lease bought out for a cool 99 million. Not a bad return.

Bill