Aeroportuario del Sureste (ASUR) and Highstar Capital-owned Aerostar Airport Holdings have closed a $2.6 billion concession of the San Juan Luis Munoz Marin International airport, making it the first major airport operated by a private consortium in the USA.
Puerto Rico's governor Alejandro Garcia Padilla signed off on the 40-year deal on 26 February, a day after the US Federal Aviation Administration (FAA) approved the concessionaire's application under the airport privatisation pilot programme. The Puerto Rico Ports Authority (PRPA) awarded the concession to Aerostar in July 2012.
It is the first private concession of a commercial airport in the USA since National Express Group leased Stewart International airport in New York for 99 years in 2000. The Port Authority of New York and New Jersey bought out the remaining term of the concession for Stewart in 2007.
"The FAA's decision is a historic milestone in unleashing entrepreneurs and engendering innovation at America's airports," says Christopher Lee, founder and managing partner of Highstar, in a statement. "The US at last joins a long and growing list of airports and seaports that are harnessing market forces to deliver first-class infrastructure."
The San Juan airport deal includes a new fee schedule for airlines, with flat costs for the first five years and then rising at a rate pegged to annual US consumer price inflation for the next 10 years, $240 million in infrastructure upgrades during the first three years that is part of $1.4 billion in capital improvements over the term of the lease, and about $585 million in revenue sharing with the PRPA that will be used to support regional airports in Puerto Rico.
The FAA granted Aerostar a part 139 operating certificate, which is required to operate an airport with commercial passenger service in the USA, in its record of decision on 25 February.
The concession is not without controversy. Local media reported protests outside of the airport property that temporarily blocked the access roads to the airport terminals on 25 February.
"Puerto Rico gave its word and we must be firm and transparent in honouring it," said Padilla at a press conference on 26 February. He had raised concerns with the FAA regarding possible employee layoffs at the airport and increased airline fees.
Aerostar said that it could not guarantee a position to any current employees of the airport but that it would interview all existing employees, in its application to the FAA in September.
Padilla also cited the PRPA's upcoming debt payments and lack of funds to invest in the airport, as further reasons for his approval.
Aerostar made a $615 million upfront payment to the PRPA as part of the deal. The proceeds will be used to defease existing debt, support regional airports on the island and for transaction costs.
Financing for the upfront payment and terminal improvements is expected to come from an about $350 million bond issue arranged by Royal Bank of Canada (RBC) and UBS. It will also include a $50 million capital expenditure facility and a $10 million revolving credit line. ASUR and Highstar will split $327 million in equity equally.
The majority of the airport's airlines, including American Airlines and JetBlue Airways - its two largest carriers by enplanements - support the concession contract.
"You offer fair rates and charges to the airlines, [and] they can offer fair fares to the customers, which drives more traffic through," Kevin Costello, chair of the San Juan Airport airline affairs committee and director of properties and airport affairs at JetBlue, told Flightglobal in November.
Chicago Midway is the next airport that could apply for FAA approval of a long-term private concession. The city received 16 responses to a request for qualifications (RFQ) for a possible 40-year concession of the airport, which is one of the largest in Southwest Airlines' system, earlier in February.
"The response generated from the RFQ process is encouraging and provides the city with a sense of the strong level of interest in a potential lease," says Lois Scott, chief financial officer of Chicago, in a statement on 26 February. "We must evaluate fully if this could be a win for Chicagoans and ensure that certain conditions and criteria are met"
Chicago anticipates that final bids for Midway will be received during the third quarter.