Out of Control Policy Blog

FAA Gives New Orleans Go-Ahead on Airport Privatization

I'm sure my colleagues Bob Poole and Shirley Ybarra will have more to say on this, but there's been a significant development on the airport privatization front in New Orleans. According to AviationNews.com:

FAA has accepted the New Orleans Aviation Board's (NOAB) preliminary application to privatize Louis Armstrong New Orleans International Airport, according to a statement issued Wednesday by the board.

As part of the privatization process, FAA completed its 30-day review of the preliminary application on Sept. 8 and accepted it, paving the way for the airport to begin the bidding process to select a private operator to manage the airport. After the private operator is selected, the airport will prepare a final privatization application for submittal to FAA.

The board now will issue a request for qualifications to determine a list of technically and financially qualified firms with the necessary and appropriate experience and resources to manage the airport. Once the qualified bidders are identified, the board will issue a request for bids. The bidder with the highest and best bid will be selected and included in the final application to FAA, NOAB said.

NOAB will continue discussions about privatization with the airlines, including the negotiation of a new airport-airline master lease agreement that establishes certain limits on air carrier rates and charges. It also will seek public input on privatization of the airport, as well as establish a data room for use by qualified bidders. Additionally, it will draft a private operator concession agreement/lease document.

The New Orleans Aviation Board, the City Council and the mayor must approve a concession agreement/lease with the winning bidder.

It is anticipated that the request for qualifications will be issued late in 2009 with a request for bids issued in the spring 2010. The final application should be presented to FAA in fall 2010.

For context, as Bob wrote in Reason Foundation's Annual Privatization Report 2009:

At least eight medium hub airports have been proposed by public officials as candidates for long-term leases under the [federal Airport Privatization] Pilot Program: Austin, Bradley (Hartford), Jacksonville (FL), Kansas City, Long Beach, Milwaukee, New Orleans and Ontario (California). Of these, New Orleans appears to have the strongest political support as of this writing. As part of a series of local and state reform efforts, a new Regional Airport Authority was created in 2008 to manage the Louis Armstrong International Airport (which is owned by the city of New Orleans but whose land includes portions of two other jurisdictions). That body is considering two options, either a takeover by the state government or privatization under the Pilot Program. Privatization appears to have the support of Mayor Ray Nagin, several council members and key business leaders.

More to come as this develops. As a former New Orleanian, I will say that it's very encouraging to see local leaders moving down this path. It offers yet another piece of supporting evidence for my strong conviction that Louisiana should be viewed as the epicenter of government reform right now, with Gov. Jindal's aggressive reform agenda, the current work of the Commission on Streamlining Government, the massive charter school revolution in New Orleans, the new privatized city of Central (Louisiana's  version of Sandy Springs), and much more. 

» Reason Foundation's Privatization Research and Commentary

Leonard Gilroy is Director of Government Reform


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