<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by N866DA:
Here's an article that was published in the AJC in December of 2002 which provides a good background on the issue of privatization of Hartsfield. It's a little more balanced than your rant.
The article was written before Delta came out with its official position against privatizaton, but there are a number of non-Delta opinions that seem pretty compelling.
Privatization backers want city to cash in on airport
Will voters buy it? Taxpayers group says leasing out Hartsfield could solve
financial problems.
By JILL YOUNG MILLER
The Atlanta (GA) Journal-Constitution
If you believe the Fulton County Taxpayers Association, Hartsfield
International Airport is more than the world's busiest passenger airport.
It's a pot of gold.
The taxpayers group wants Atlanta to lease its airport to a private company
and use the money to repair the city's leaky sewers -- a fix expected to
cost $3 billion -- and to solve the city's other financial problems, which
in the past year have translated into higher property taxes for homeowners
and lost jobs for hundreds of city workers.
The idea of leasing the cash-poor city's most valuable asset for an
emergency infusion of money isn't being greeted with cheers in the places
that ultimately may matter most. Without leadership from Atlanta City Hall
and a stamp of approval from Hartsfield's dominant carrier, Delta Air Lines,
the idea will remain just that, airport consultants say.
"Some people say, 'Why not just try it?' " said Hartsfield General Manager
Ben DeCosta. "And I'm saying, 'Be careful what you play with, because you
don't want to make the golden goose sick.' "
Still, since the nonpartisan anti-tax group began a door-to-door campaign
last month, more than 15,800 Atlanta residents have signed petitions seeking
a special city election on whether to privatize the airport, said
association President John Sherman. The group plans to collect nearly 30,000
signatures so it can get the city to put the measure on a ballot, he said.
"We've had neighborhood associations from all over the city sign the
petition in large groups," he said. "There's a tremendous enthusiasm."
City officials are paying attention.
On Thursday, the Atlanta City Council's Transportation Committee will hold a
session on privatizing Hartsfield. The committee plans to report its
findings to Mayor Shirley Franklin.
Christine P. Ries, an economics professor at Georgia Tech who teaches about
privatizing government entities, signed the petition. "I think it's a call
to action," she said.
Federal law requires money made at commercial airports to be spent on the
airports. The only way Hartsfield revenue could find its way into the city's
general fund would be if the airport participated in a pilot privatization
program under the Federal Aviation Administration.
Up to five airports -- including one large hub, such as Hartsfield -- may
participate in the program.
In the five years the program has existed, though, U.S. airports haven't
embraced it. The only taker so far: a small commercial airport north of New
York, now leased and operated by a British company.
Leasing or selling airports to private companies is more popular in other
parts of the world. Globally, more than 100 airports have been privatized,
according to the Reason Foundation, a pro-privatization think tank in Los
Angeles.
"There've been some real improvements in how airports operate, thanks to
bringing in both private financing and private management," said Robert W.
Poole Jr., director of transportation studies at the foundation.
"Clearly, Hartsfield airport is a huge economic engine for Atlanta, and it's
quite plausible that it could generate significant lease revenues that would
help the city's budget," he said.
Airports in Britain were the privatization pioneers. Fifteen years ago, the
government sold its British Airports Authority corporation and the seven
airports it operated, including London's Heathrow and Gatwick, in a $2.5
billion public share offering.
The proceeds were used to reduce the national debt.
Because of increasing passenger traffic and its airport-as-shopping-mall
concept, BAA -- now the world's largest commercial operator of airports --
reports annual profits exceeding $788 million.
"The face of the airports has totally changed from what you would have seen
in the '80s," said Caroline Corfield, BAA spokeswoman. "We're one of the
privatization success stories" in the United Kingdom.
Comparisons difficult
Privatized airports in other parts of the world, however, aren't precise
comparisons for determining Hartsfield's value, because foreign airports
operate under different regulations and methods of financing.
"It's very difficult to do apples-to-apples comparisons," said airport
management consultant Doreen Frasca, president of Frasca & Associates in New
York.
No one knows what price Hartsfield could fetch. Arriving at an airport's
market value is an extremely complex undertaking. Frasca and another
consultant ventured cautious estimates of Hartsfield's worth ranging from $2
billion to $7 billion.
Only after months of study could anyone arrive at a solid number, Frasca
said.
The big picture includes the airport's financial history, its revenue, its
costs and its debts, she said. Then, "you have to look at every single lease
at this airport, from the shoeshine guy to the airlines."
A private company also would take a close look at food, beverage and retail
sales. Hartsfield already raises about 50 percent of its revenue from
concessions, a percentage on par with BAA's airport earnings.
The airport "has made very great strides in improving the number and quality
of its retail offerings," Frasca said. "I'm sure that performance can be
improved even more. The question is, how much more? That will directly
impact what the airport's value is."
U.S. airports generally "haven't really realized the commercial
opportunities that are available and the attraction for the passenger,"
BAA's Corfield said.
"Retail is critical to our being able to invest heavily in the airports and
to being able to provide a profit for our shareholders," she said. "And the
retailing is used to keep the charges down for the airlines."
But she couldn't say whether BAA's formula would succeed at Hartsfield. BAA
hasn't studied the Atlanta airport, she said, and the company's
international team doesn't see "any prospect" of Hartsfield being privatized
because the "climate post-Sept. 11 is moving more toward U.S. airports
coming under greater federal control."
BAA's business in the United States is limited to managing Indianapolis
International Airport and retail operations at Boston's Logan International
Airport and Pittsburgh International Airport.
For now, BAA isn't pursuing new business in the United States, she said.
Just because the FAA offers an airport privatization pilot program, "it
doesn't always mean that a privatization is the right path to follow,"
Frasca said. She worked as a consultant on the privatization in 2000 of
Stewart International Airport, a small regional airport in Newburgh, N.Y.
Stewart now is run by a subsidiary of the London-based National Express
Group.
"That is a very, very big step," she said. "It is not a step that has been
taken by any large hub airport in the United States, although there are
other airports of roughly Atlanta's size in Europe that are operated and
managed by the private sector."
Political will necessary
Meanwhile, Hartsfield never will be leased if the political will doesn't
exist in Atlanta, said Frasca and another consultant, Steve Steckler,
president of Infrastructure Management Group Inc. in Bethesda, Md. "There
has to be a very visible person at the top who really believes it's the way
to go," Frasca said.
At this point, Atlanta's chief financial officer, Rick Anderson, isn't sold
on the idea of leasing Hartsfield. He has said that when he evaluates the
airport's finances, he doesn't see "a bunch of money there waiting for
somebody to come along and pluck it out."
Still, "the mayor has said that she intends to look at this in the first
quarter of next year," Anderson said. "I think she intends to spend some
time trying to get some real facts. But I guess at this point it's still in
the category of one of the things that people are talking about, but
nobody's come forward with any real world way to do it. Period. Much less a
way that would both benefit and protect the interests of the city."
City Councilman H. Lamar Willis, chairman of the Transportation Committee,
which oversees the airport, is organizing Thursday's public meeting, at 1
p.m. in City Hall, on the prospect of leasing Hartsfield. Officials from the
airport, Delta, the FAA, the Transportation Security Administration, the
city's Law Department and others will attend, Willis said.
Deciding to lease the economic engine that is Hartsfield would mean a
dramatic change of policy on the airport, and DeCosta is skeptical.
"A private company has a different mission, right?" he said. "The mission of
a government is to provide the best airport and air transportation system
that you can get for the money. There isn't a shareholder or equity
objective. We're not looking to make a profit. We're making sure that the
public is safe and secure."
And officials are trying to make sure that the airport remains robust, he
said. Hartsfield anticipates, after debt payments, net revenue of $65.8
million in 2003.
While that may sound like a lot of money, "it's not realistic that it is
free money available to help everybody else," DeCosta said.
"The airport has a long-term forecast for growth. And growth requires you to
be able to reinvest in your plant and keep it fresh and to invest in the
expansion so you can handle the growth."
A public airport's current finances aren't a reliable measure of what it may
be worth to a private investor, consultants said.
Privatized airports tend to operate entirely differently than they did when
they were government-owned. Said Steckler, "Simply put, Atlanta's airport
may be more valuable to Atlanta in someone else's hands."
He added: "This doesn't mean that Hartsfield's existing management is not
competent. Quite the contrary. It just means that the management's to-do
list does not include generating cash to hold down city taxes or upgrade
public services. Nor does it have the investment and management freedom
available to it that private managers do."
Darryl Jenkins doubts Atlanta's airport may be more valuable to Atlanta in
someone else's hands. He's a director of the GW Aviation Institute and
professor of airline management at George Washington University.
"This is just an awful idea," he said of the campaign to lease Hartsfield.
"It's a bad idea for the people of Atlanta because Hartsfield right now is a
reasonably well-run airport, and the last thing we need right now is to mess
around with that."
Efficiency stressed
Privatizing airports makes sense in other parts of the world "where they
have no access to capital and no access to municipal bonds or anything at
all," Jenkins said. "In Africa, it makes sense. Then the country's better
off and everybody's better off. This is not the case in Atlanta."
Jenkins added, "Here's what the people in Atlanta should do if they have
financial problems: They should clean up their mess and try not to ruin
something that is operating reasonably well right now -- and that's your
airport."
DeCosta calls Hartsfield "one of the most efficient airports in the nation."
One measure of its efficiency, he said, is the airlines' per-passenger
payments to the airport. At Hartsfield, it's $2.80, while the current large
hub average nationally is $8.20, according to Hartsfield documents. That
"suggests to me that there's not great opportunity for cost savings" to be
found under private management, he said.
"I think an airline would have to be crazy to agree to privatization of
Hartsfield," DeCosta said. "Because a private company would have only one
incentive, and that is to raise their rents and rates."
Under the rules of the federal privatization pilot program, an airport's
airlines have veto power over any deal to lease an airport and divert funds
from the airport.
"In Atlanta," said privatization advocate Poole, "that means Delta, long and
short of it. If you don't get Delta behind the deal, it's not going to
happen. The deal would have to be a win-win proposition for Delta as well as
for the city."
Whether Delta would get behind such a deal is a big question. Delta
spokesman John Kennedy said the airline wouldn't comment on "a speculative
proposal." Delta Vice President John Boatright wrote to taxpayers group
leader Sherman that a "primary consideration would be the unnecessary
substantial increase in cost to airport tenants, and ultimately customers."
The pilot program's rules, however, bar airports from increasing charges to
airlines by more than the inflation rate, Poole said. He and others suggest
that privatization actually can help cut airlines' costs and point to
Indianapolis as an example.
That airport, owned by the Indianapolis Airport Authority, has been managed
by BAA since 1995. In seven years, the British company has made $34 million
in nonairline revenue that is credited toward lowering airlines' costs, said
BAA's Indianapolis spokesman, Dennis Rosebrough.
"What BAA did is they found a way for the airport to make a lot more money,"
said industry consultant Steckler. "Not by raising charges to the airlines,
but by increasing food, beverage and retail sales and increasing cargo. They
were able to reduce the cost to the airlines while making the airport a
stronger economic engine for the community."
Whether such possibilities exist at Hartsfield remains up in the air.
Said DeCosta: "Those people who speak of privatization are usually looking
at the private sector operating something more efficiently than does
government. You won't find very many opportunities to run this airport more
efficiently than it's currently being operated."</font>