St. Louis wins U.S. approval to explore airport privatization

[April 24, 2017]  By David Shepardson

WASHINGTON (Reuters) - The U.S. Transportation Department said on Monday it has granted preliminary approval to St. Louis to explore putting its city-owned airport under private management.

The announcement could help gauge private sector interest in the Trump administration's calls for investors to boost infrastructure.

The Missouri airport would become the second major U.S. airport after San Juan, Puerto Rico to operate under private management.

The Transportation Department told Reuters it approved the preliminary application of St. Louis Lambert International Airport, owned and operated by the city of St. Louis, under a 1996 law that allows the Federal Aviation Administration to approve up to 10 pilot airport privatization projects.

U.S. President Donald Trump's administration plans to unveil an infrastructure plan worth at least $1 trillion over 10 years through a mix of public and private spending but has not disclosed how much federal money it will seek.

Preliminary approval "demonstrates the administration’s commitment to leveraging innovative financing strategies to revitalize our nation’s aviation infrastructure," Transportation Secretary Elaine Chao said in a statement.

The next steps for the city include selecting a private operator to manage the airport and negotiating an operations agreement. A final agreement would also need the support of airlines and city boards.

St. Louis Mayor Lyda Krewson said in a statement released by the Transportation Department the announcement "is a great opportunity to explore a public private partnership."

At an April 4 White House forum, National Economic Council director Gary Cohn said privatizing air traffic control, which the administration proposed in its budget outline in March, "is probably the single most exciting thing we can do."

Cohn said if cities "sell off" or privatize infrastructure assets, the administration could provide financial support.

A 2014 government audit report said higher financing costs for privatized airports "and the possible lack of state and local property tax exemptions" may account for lack of interest.

The most prominent attempt was in 2006, when Chicago received approval to lease city-owned Midway Airport to private investors. In 2008, the city agreed to a $2.52 billion, 99-year lease but investors could not secure financing.

Lambert airport struggled after American Airlines acquired TWA in 2001 and then closed its hub there. But the airport has rebounded and traffic rose nearly 10 percent last year to 13.9 million passengers.

Southwest Airlines Co is the largest carrier at Lambert by passengers boarded, followed by American, Delta Air Lines Inc and United Airlines.

(Reporting by David Shepardson; Editing by Chris Reese)

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