New Orleans takes steps toward airport privatisation

Washington DC
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The New Orleans Aviation Board is preparing to issue a request for qualifications (RFQ) by the end of 2009 to pre-qualify prospective bidders for a contract to privatise New Orleans International airport.

Airport privatization was a campaign goal of New Orleans mayor Ray Nagin and is an opportunity for the airport to generate resources for the city as it recovers from Hurricane Katrina, aviation board director Daniel Packer Jr. says.

Hurricane Katrina struck the city in 2005.

A request for bids for the Louisiana facility is expected to be published in spring 2010 and the board anticipates submitting its final application for FAA approval in fall 2010, an airport spokeswoman says. She adds that the airport board, the New Orleans city council and the mayor of New Orleans must also approve the lease and concessions agreement with the winning bidder before it can be finalised.

Preparation for the RFQ follows FAA approval of the airport's preliminary privatisation application earlier this month.

While the airport board prepares the RFQ, it continues to discuss the privatisation effort, including the negotiation of a new airport-airline master lease agreement that establishes limits on rates and charges with carriers operating from the airport. At least 65% of the nine airlines currently serving the airport last year must approve the privatisation effort per federal guidelines.

Southwest Airlines has the largest presence at the airport, accounting for some 28% to 30% of operations, the airport spokeswoman says. The combined operations of Delta Air Lines and Northwest Airlines account for the second largest percentage of operations, followed by Continental Airlines, she adds.

New Orleans International is the latest commercial airport to potentially become private in the US as Chicago attempted to privatise Chicago Midway International airport earlier this year.

The credit crunch thwarted the Chicago effort as the consortium selected for the job failed to meet its financing deadline. Chicago has said it will begin another bidding process after the economy rebounds.

New Orleans has discussed privatisation for at least six years and will find out if the effort is feasible through the RFQ and bidding process, the airport spokeswoman says.

If New Orleans is successful in its proposed privatisation, it will become the second airport to be privatized in the US.

Previously Stewart International airport was the first privately-run airport in the country after UK firm National Express Group inked a 99-year, $35 million-lease effective April 2000 for the facility roughly 60m (97km) north of New York City.

The transaction occurred under the FAA's pilot program that allowed for the sale of five airports, but the privatisation of the Newburgh, New York airport did not last. The Port Authority of New York and New Jersey assumed ownership of Stewart in November 2007, paying National Express $78.5 million for the remainder of the lease.