April 08, 2007

Midway Airport Privatization

From ChicagoBusiness.com. Note the fact Chicago is not just going to talk to one bidder but "potential" bidders. Here is a small part.

Southwest Airlines Co. and other carriers are balking at Chicago's plan to lease Midway Airport to a private operator, putting the brakes on the high-profile deal and the billions it could bring to city coffers. Concerns raised about the plan have pushed back the timetable for requests for potential bidders, a process the city was hoping to begin last month so that a deal could close by the end of this year.

"The more we learn, the more questions arise," says Ron Ricks, executive vice-president for law, airports and public affairs at Southwest, Midway's dominant airline. Leasing Midway, which could fetch as much as $3 billion, is extremely important for Mayor Richard M. Daley, who hopes for a cash windfall to bolster the city's underfunded pension plans and to pay for infrastructure repairs and upkeep. The idea is similar to the agreement to lease the Chicago Skyway in late 2004, which reaped $1.8 billion.

City officials have tried to sell the airlines on the proposal by projecting cost savings over a 20-year period, presuming a private firm can run the airport more efficiently and pass those savings on to the carriers.

1 comment:

Anonymous said...

Terminal move could start Logan shuffle
As Continental nears deal to shift, others line up to gain space
By Peter J. Howe, Globe Staff | April 10, 2007

Logan International Airport officials are nearing a deal to move Continental Airlines over to the half-empty $500 million Delta Air Lines Terminal A, which could spur an extensive shuffling of airline gates.

Among other implications, the move could finally lead to fast-growing AirTran Airways getting a bigger block of contiguous gates in Terminal C, instead of its current split-level configuration between the old Terminal D and the United Airlines side of Terminal C upstairs. Midwest Airlines, which flies from Boston to Milwaukee and Kansas City, Mo., is also likely to have to switch locations inside Terminal C.

Edward C. Freni , aviation director for the Massachusetts Port Authority, which runs Logan, said, "We're negotiating right now. We're close. We should have Continental moved" by year's end. One key issue, Freni said, is financial terms, including rent concessions by Massport to offset the costs Continental Airlines Inc. would incur for moving operations.

Two main factors are driving Logan's game of musical chairs: a gate shortage in Terminal C and a gate surplus in Terminal A.

Massport contracted three years ago with JetBlue Airways Corp. to provide JetBlue with 11 gates in Terminal C by the end of next year, up from eight currently. On the heels of rapid service expansions at Logan last year, including new flights to Dulles International Airport outside Washington, D.C., JetBlue is continuing to grow and next month will launch service to Charlotte, N.C., and San Francisco from Logan.

The carrier's growth means that Continental and Midwest would likely have to move out of three gates they now occupy next to JetBlue's operations.

Meanwhile, over in Terminal A, as part of Delta's plans to emerge from bankruptcy reorganization this month, Massport last month agreed to take over as much as $10 million in annual terminal maintenance costs from Delta in exchange for being able to rent out six of the 18 big-jet gates and three of the seven tarmac parking spots for regional jets there.

Delta Air Lines Inc. spokeswoman Gina P. Laughlin said Continental would be a good tenant in Delta's terminals. Both airlines, along with Northwest and several international carriers, are members of SkyTeam Alliance, a group of airlines that share frequent-flier programs, one-ticket bookings for connecting flights, and airport lounge memberships.

"We would welcome a SkyTeam partner to be neighbors with us in Terminal A. It'd be good for our customers," Laughlin said.

Continental, which has five gates at Logan, declined to comment.

One factor helping to ease gate reshuffling is the February move of Air Canada to three gates in Terminal B from gates it formerly used in the United section of Terminal C, gates 11 through 21 that are mostly used by United or sublet to other carriers.

The Air Canada move has freed potential space for both AirTran -- which now flies to 10 cities nonstop from Logan -- and Midwest. AirTran currently runs most of its Boston service out of three C-numbered gates that were formerly called Terminal D, which was the "new" international terminal for Logan when it opened in 1964.

If all the current moves go through, Freni said the only other change he now envisions would involve relocating Northwest Airlines, which is now based in the international Terminal E and operates even domestic flights to Detroit, Indianapolis, Minneapolis, and other cities from the international terminal.

With service to Glasgow, Madrid, and Ireland West Airport in Knock starting this summer and Northwest adding a second daily non stop to Amsterdam, Logan's international business is likely to be up 5 to 7 percent this summer. That, Freni said, has Logan officials interested in relocating Northwest to open more international gate slots.

Northwest declined to comment.

Peter J. Howe can be reached at howe@globe.com.

Harry Tembenis
Worcester, MA