ST. LOUIS (KMOV.com) — The City of St. Louis is taking preliminary steps to explore the idea of privatizing St. Louis Lambert International Airport, according to a source.
City leaders were in Washington, DC Wednesday where they filed a preliminary application with the Federal Aviation Administration, a document which essentially serves as a placeholder for St. Louis to begin the process of determining if privatization is in the city’s best interest.
The idea is in the very initial stages and the city could withdraw at any time. St. Louis is among only a handful major metropolitan airports in the United States to formally consider the idea.
While city officials have not yet commented on the exact reasons why they are exploring the option, one consideration is certainly financial. Under current law, most revenue generated at the airport must be used exclusively at the airport. If the airport were to privatize, funds from an arrangement could be used elsewhere in the city, for other services such as police, fire, and MetroLink.
The City of St. Louis says revenue from the airport has remained flat – at about $6 million annually over recent years – and is not expected to change under the current structure. Under a public-private partnership this city would immediately receive money for non-airport uses.
Currently, Lambert is a public entity, owned by the City of St. Louis. Privatization would mean shifting governmental function and responsibilities of operating and managing the airport to a private entity. Although the exact structure of a private arrangement would not be known until further in the process, a source tells News 4, the city would maintain ownership and lease or rent the airport to a private entity.
The mechanism that allows airports to privatize was created back in the 1990’s. It’s a program known as the Airport Privatization Pilot Program or APPP. Since its inception, there has been limited interest in the program.
“If the FAA accepts our pre-application, we will have an opportunity to explore whether this is the right option for St. Louis,” Mayor Slay said in a news release Wednesday evening. “We will begin examining how this pilot program might benefit the airport, our City, and our region. We owe it to taxpayers and the airport’s users to reap the maximum benefits of the airport, and we believe this pilot program has the potential to do just that by improving airport revenue through private partner innovation, diversification, and improved use of land assets.
According to government reports, only one airport, Luis Munoz Marin international Airport in San Juan, Puerto Rico, is currently authorized to run privately in the US, under the program. One other airport, Stewart International in Newburgh, NY, went private but has subsequently returned to public management.
City officials in Chicago explored the idea and got to the final stages of the process for Chicago’s Midway Airport. However, according to media reports, the deal fell through in the summer of 2013 because two of three bidders for the contract withdrew from the process and without them, city leaders felt the bid process was no longer competitive.
The price tag for simply exploring the idea of privatizing Lambert could prove costly. A government report notes that the City of Chicago spent $16.5 million on privatization-related transaction costs, while Puerto Rico spent $17.4 million.
The city said Grow Missouri, Inc. will cover all costs.
“Grow Missouri, Inc. is proud to support this airport pilot program in hopes of creating game changing economic growth,” Travis H. Brown, President of Grow Missouri, Inc., said.
If the preliminary application gains approval from the FAA, the process will then begin over the next year to explore the region’s options. The city would eventually need to gain approval from airlines and the FAA.
City leaders also say any private-public partnership would ultimately have be approved by a public vote.