If there was any question whether investors would be interested in a long-term lease of Chicago’s Midway Airport, it was answered in the affirmative at the beginning of April. Six high-powered teams submitted their qualifications to the city, which will presumably winnow them down to the best-qualified subset, who will then be invited to submit formal bids. With the basic terms of the lease already decided (in order to win agreement from Midway’s airlines), the winner will be the firm offering the highest dollar amount. The six teams included mostly firms that had been expected to bid-though noticeably absent were industry giants Ferrovial (which may have its hands full refinancing its costly acquisition of BAA) and Fraport (which had been rumored to be seriously interested). The six that did submit qualifications are: * Abertis/Babcock & Brown/GECAS-Abertis owns TBI which operates Albany and Burbank airports under contract, and has long-term leases for the terminals at Orlando-Sanford. * Macquarie Capital/Macquarie Airports/Macquarie Infrastructure Partners I and II-Macquarie already has a Chicago presence via its lease of the Chicago Skyway and holds stakes in Sydney, Brussels Charleroi, Bristol (UK), and Copenhagen airports. * Hochtief AirPort/GS Global Infrastructure Partners I-Hochtief has major stakes in Athens, Budapest, Dusseldorf, Hamburg, and Sydney airports. * YVR (Vancouver) Airport Services/Citi Infrastructure Investors/John Hancock Life Insurance-YVR operates airports in Chile, Dominican Republic, Jamaica, and Canada. * Morgan Stanley Infrastructure Partners/Aeroports de Paris/HMS Host-ADP owns the three major Paris airports and operates other airports in Cambodia, China, and Europe. * AirportsAmerica Group/Carlyle Infrastructure Partners-a somewhat mysterious group about which Carlyle has declined to provide details (except, presumably, to the city of Chicago). The city has not released a timetable, but it’s likely to announce the short-list within a couple of months, along with a formal invitation for the short-listed teams to submit their bids. Lisa Schrader, the city’s deputy CFO, told Aviation Daily that they expect to close the lease transaction within 9 to 12 months, after approvals from the FAA, TSA, and the City Council. There is much speculation as to how much will be offered for the 50-year lease. In Issue No. 32 of my Airport Policy Newsletter, I expressed skepticism that the figure would be in the $3 billion range that has been mentioned in many media reports, given the airport’s small land area (one square mile), limited airside capacity, and already fairly well-developed retail operations. But in recent weeks I’ve had several knowledgeable people suggest to me that there is more potential than meets the eye at Midway. For example, as of now, there are 1,895 weekly airline departures, but as recently as 2004 that number was 2,449-so we know that a 30% increase (at least) is possible. An attorney advising one team suggested that his team had come up with a number of creative options to maximize value at the airport. Another told me that there has been recent interest by developers in acquiring land bordering Midway, in hopes of being able to negotiate joint-development deals with the winning bidder. So while I remain somewhat skeptical, I’d be pleased to be proven wrong. If Midway does generate significant value for the city, the lease could be as precedent-setting as the city’s January 2005 lease of the Chicago Skyway. That transaction focused global attention on the United States as a new market for privatization of toll roads. But for the same thing to be possible in the airport sector would require Congress to amend the Airport Privatization Pilot Program legislation it enacted in 1996 . Although it permits four air carrier airports to be leased, only one can be a large hub, which is how Midway is categorized by the FAA. The FAA’s reauthorization proposal, which was largely ignored by Congress last year, had called for liberalizing the pilot program. It would probably take active lobbying by America’s mayors to open up additional large-hub privatization opportunities. Reason Foundation’s Airport Policy and Air Traffic Control Research