From water treatment plants to trash collection services to highway management, big chunks of the nation’s infrastructure are being sold off to private companies hoping to spin a buck off of vital public utilities. But, according to a federal study, the nation’s airports have been resisting the profiteers, much to the benefit of consumers.
Officials and corporate interests often tout airport privatization as a policy initiative that brings increased efficiency. But, in a report released publicly on Friday, the Government Accountability Office found those claims to be dodgy.
“Some academic research has examined efficiency outcomes under various airport ownership structures and found mixed results as to the extent that privatization enhances the efficient operations of airports,” the report stated.
The GAO noted that the lack of sales wasn’t for a dearth of US government cheerleading. Since Congress passed the Airport Privatization Pilot Program (APPP) in 1997, only Puerto Rico’s Luis Munoz Marin airport remains privately owned under the scheme. .
In the US, not a single airport remains privatized under the APPP.
New York State’s Stewart airport was sold in 2000 to a company called NEG–despite its efforts to back out of the deal at the 11th hour. The GAO described it as a disaster for travelers.
“NEG focused on managing the airport for immediate financial return and was not interested in investing in the airport,” it noted. In 2007, with the airport in decline, the company sold it back to the New York and New Jersey Port Authority. According to the GAO, it’s public owner “made far greater investments compared to NEG to bring the airport up to Port Authority standards and to retain a key airport tenant.”
Preserving the public interest is the fact that airport purchases are difficult to finance at any point along the boom-bust cycle. The city of Chicago, the GAO noted, tried to fill a $9 billion budget gap by selling off Midway airport through the APPP. However, when the economy went bust in 2008, the consortium of potential buyers couldn’t secure the funding it needed. “Changes in the economy, such as the onset of a recession, can alter the value and outcome of a privatization of a deal” the GAO said.
Other factors such as lengthy application times and complex evaluations standards often derail airport purchases, the GAO said. It also noted that “public opposition to privatization can undermine the public-sector airport owner’s interest in privatization unless the goals and benefits are clearly stated.”
Of the nation’s 3,330 airports in operation, nearly all are owned by local, state, or federal stakeholders.
Read the full GAO report here.
