Thursday April 3, 08:45 AM
Privatization of first major US airport attracts foreign interest
By Mira Oberman
CHICAGO (AFP) - Foreign investors are lining up to bid to operate Chicago's Midway International Airport, the first major US airport to be privatized under a federal initiative launched more than a decade ago.
City officials say six consortiums, which include firms from France, Australia, Germany, Canada and Spain, are vying to run Chicago's secondary airport.
While many European airports were privatized years ago, all commercial airports in the United States are currently operated and owned by local or state governments.
Midway (Stockholm: MIDWB.ST - news) was the first major hub airport to apply for privatization approval since the US congress established a pilot program in 1996 to explore the use of private operators at commercial airports.
Yet it remains unclear whether the effort will generate a backlash if a foreign firm is chosen, in light of security concerns raised after a failed effort by a Dubai group to take over major US ports.
"This will surely generate debate since there may be perceptions about foreign ownership of sensitive or critical transportation properties like we saw with the Dubai port deal," said Joe Schweiterman, a transportation professor at DePaul University in Chicago.
The groups which have submitted qualifications statements are:
- Spain's Abertis Infraestructuras SA, Australia's Babcock & Brown Group and US-based GE Commercial Aviation Services;
- AirportsAmerica Group, consisting of US-based Carlyle Infrastructure Partners LP;
- Chicago Crossroads Consortium, consisting of Australia's Macquarie Capital Group Limited and Macquarie Airports and US-based Macquarie Infrastructure Partners and Macquarie Infrastructure Partners II;
- Chicago First Consortium, consisting of Germany's HOCHTIEF AirPort GmbH and HOCHTIEF AirPort Capital GmbH & Co and US-based GS Global Infrastructure Partners I, LP;
- Midway Investment and Development Corporation, consisting of Canada's YVR Airport Services Ltd. and US-based Citi Infrastructure Investors and John Hancock Life Insurance Co;
- France's Aeroports de Paris Management and US-based Morgan Stanley Infrastructure Partners and HMSHost Corporation.
The city said that once the firms are determined to be qualified, "the highest bid amount will be the only factor in determining who will operate the airport."
"We are very enthused with the strong indications of interest we have received from teams wishing to operate Midway in what would be the first lease of a major US airport," said Paul Volpe, the city's chief financial officer.
A decision is expected in the next eight to 12 months.
The deal must be approved by federal regulators and 65 percent of the six airlines operating at the airport.
The private operator must also meet safety and security standards and the Transportation Security Administration will continue to oversee screening and airports security.
The 50-year lease is expected to raise between two and three billion dollars for the city.
But while the cash will be a welcome infusion, US municipalities have been wary of giving up control of airports which are often seen as their "crown jewels," Schweiterman said.
The city will retain control over its primary airport, O'Hare, which handles 76 million passengers a year.
Midway's five runways handled nearly 304,000 flights and more than 19 million passengers last year.
Chicago is leading the nation in the privatization of city services.
It (Frankfurt: A0MLX5 - news) was the first city to lease a major piece of infrastructure in 2005 with a 1.8 billion dollar deal for the right to manage a key toll bridge for 99 years.
In February, the city offered up its 360,000 parking meters for lease after having rented out four of its parking garages to private operators.
It is also considering privatizing garbage collection and is trying to raise money by selling naming rights.
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