Many in the aviation community have been monitoring the progress of Chicago’s efforts to privatize Midway International Airport (MDW) under the Federal Aviation Administration’s (FAA) Airport Privatization Pilot Program. The City faces a July 31, 2010 deadline to either select a private operator for MDW or seek an extension of the City’s slot in the Program from the FAA. Chicago is the only approved applicant for the Program’s only large-hub slot. If the application is approved, MDW would be the first privatized large-hub airport in the U.S.
The Airport Privatization Pilot Program was established in 1996 by Section 149 of the Federal Aviation Administration Authorization Act, which added a new Section 47134 to Title 49 of the U.S. Code. Section 47134 authorizes the Secretary of Transportation and, through delegation, the FAA Administrator, to exempt a sponsor of a public use airport that has received Federal assistance from certain Federal requirements in connection with the privatization of the airport by sale or lease to a private party.
The Administrator may exempt the sponsor from some or all of the requirements to: (1) use airport revenues only for airport related purposes; (2) pay back a portion of Federal grants upon the sale of the airport; (3) return airport property deeded by the Federal Government upon transfer of the airport. The Administrator is also authorized to exempt the private purchaser or lessee from the requirement to use all airport revenue for airport related purposes, to the extent necessary to permit the purchaser or lessee to realize a profit from operation of the airport.
In establishing the Pilot Program, Congress also placed limitations on the number and types of airports eligible to participate. Section 47134(d)(1) provides that if the applications of five airports are approved, at least one must be a general aviation airport. Section 47134(d)(2) provides that no more than one of the airports approved may be a large-hub airport (an airport with more than one percent of revenue passenger boardings in the U. S. in the prior calendar year on an aircraft in service in air commerce, as defined in 49 U.S.C. section 47102(10)).
FAA final approval of a privatization application is based on a number of conditions, including the private operator’s ability to ensure continued access to the airport on reasonable terms, continued safe operations, ensure continued maintenance and improvements, adequate security, mitigation of noise and environmental impacts, and to provide for the continued operation of the airport in case of the private operator’s bankruptcy or other default. Privatization must be approved by at least 65% of the air carriers serving the airport and air carriers whose aircraft landing at the airport during the preceding calendar year had a total landed weight of at least 65% of the total landed weight of all aircraft landing at the airport during that year.
Since the Pilot Program was implemented, nine airports have applied for privatization. Five have withdrawn or terminated their application. The four active applicants are: MDW; Gwinnett County Briscoe Field (Lawrenceville, GA); Louis Armstrong New Orleans International Airport (LA); and Louis Munoz Marin International Airport (San Juan, PR). With the approval of Chicago’s preliminary application, all applications from other large-hub airports will be placed on a standby list. One slot remains available for a non-large-hub or general aviation airport.