It’s no secret that New Orleans is struggling to rebuild its economy—and that tourism will continue to play a major role in that effort.
So the decision by the Federal Aviation Administration (FAA) to approve a request to begin the privatization process for the city’s Louis Armstrong International Airport may have major implications for the city’s future.
But after Chicago‘s failure to privatize its Midway Airport, the implications of a successful airport privatization could resonate far beyond the bayou.
The FAA approved the request by the New Orleans Aviation Board to join a pilot program, which allows up to five airports nationwide to convert to private management, on September 8.
The move to privatize the airport comes at a time of transition for both New Orleans and the airport itself.
Louis Armstrong International’s Director of Aviation, Sean Hunter, is resigning on October 15 in the wake of a lengthy leave of absence. Though Hunter resigned in conjunction with what the airport called a federal inquiry into a family member’s “possible insurance violations,” it does not appear to be directly related to airport operations (or Hunter himself, for that matter). His resignation leaves Patricia Malone, the airport’s deputy director of finance and administration, as the acting director.
And because any privatization deal must be approved by the mayor and the City Council of New Orleans, the city’s upcoming elections are also a factor. The first round of voting will occur in December 2009, with the new mayor and a number of new City Council members taking office in May 2010. Currently, the Aviation Board is aiming to have the entire process completed in late 2010 or early 2011.
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Any plan will also require the final approval of the FAA and 65 percent of the airlines that offer commercial flights from the airport.
The previous effort to privatize an American airport fell apart when the global credit crunch undercut financing and the deal to lease Chicago’s Midway Airport fell through. Midway gets roughly twice as many passengers as Louis Armstrong New Orleans International—its leasing deal would have yielded over $2.5 billion for Chicago, although about half would have gone to repay airport debts and bonds.
New Orleans Aviation Board Chairman Dan Packer said that while the city might not see exactly half of what Chicago expected, it does “give us a feel” as to a potential figure.
Though several dozen airports around the world are now privately managed, there is only one privately managed airport with commercial service in the U.S.: Missouri’s Branson Airport.
Branson Airport, opened in May 2009, was built from the ground up as a private airport and was never publicly managed. If Louis Armstrong International can find companies to lease it, it would be the first in the country to make the transition from public to private management.
By Matthew Calcara for PeterGreenberg.com.
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