A new study from the Reason Foundation estimates that leasing the U.S.’s largest airports through public-private partnerships could generate billions for general governmental use.
Federal regulations prohibit governments from using airport revenues for their general needs, noted Robert W. Poole, Jr., director of transportation policy at the Reason Foundation and author of the study, Should Governments Lease Their Airports?. Poole, who has long advocated for the privatization of the air traffic control system, noted that there are no such restrictions overseas and that some international governments are able to tap into revenues through the privatization of large and medium-sized airports.
Through the FAA reauthorization legislation in 2018, Congress provided an exception to the long-standing revenue diversion measure by creating the ability for government airport owners to enter long-term public-private partnership leases and for net proceeds to be used for general governmental purposes.
The Reason Foundation explored the potential of leases for 31 large and medium-sized hub airports, estimating what they might be worth to investors. Looking at net value that subtracts outstanding airport bonds, the study found that 25 of the facilities could top the $1 billion mark, with the highest estimates indicating that Los Angeles International could be worth $17.8 billion, San Francisco International $11.9 billion, and Dallas-Fort Worth International $11.9 billion.
Proceeds from the lease of airport assets could be used to fund other infrastructure needs of the jurisdiction, pay down the local government’s debt, or shore up pension plans, the study suggests.
“The relative attractiveness of using lease proceeds for each of these purposes will likely depend on specifics of the city, county, or state in question,” Poole said. “A government with a pressing need for a major unfunded infrastructure facility may find that use the most attractive, while a jurisdiction where unfunded pension liabilities threaten either large tax increases or something akin to bankruptcy may prefer using an airport windfall to shore up its pension system.”