Trump has a good swamp-draining plan: Privatize our airports
Back in the late 1990s, a partisan kerfuffle erupted over the naming of Washington National Airport after President Ronald Reagan.
Twenty years later, a fellow Republican, President Trump, isn’t popular, either. But the Trump administration’s idea of selling the area’s two large airports — Reagan National and Dulles International — should be taken seriously by anyone who cares about infrastructure in the Washington area.
Dulles and National are two of the crown jewels of the region’s economy, collectively serving more than 45 million passengers in 2016. Together, the duo ranks in the top 10 on the list of busiest airports in the United States, making them very attractive assets for private companies.
When public money is hard to come by and airlines are perceived as failing, selling Dulles and National could channel billions of dollars into local infrastructure and improve passenger experience in the clogged skies.
The Trump administration’s proposal to sell off both airports as part of its $1.5 trillion-plus infrastructure plan announced last month was met with derision and surprise. This is because the United States never went through a period in which it privatized national assets, as occurred in many countries in Europe, Canada and Australia during the 1980s and 1990s. In these countries, the effort has been looked upon as generally successful.
As a sweetener, studies of airport privatization in Britain show privatized airports had a significantly higher level of efficiency than government-run airports — probably for the same reason customer service is more efficient at a Starbucks than at any Department of Motor Vehicles office.
The key to a successful airport deal will be how the sale is structured.
The best example of how to move public assets into private ownership began roughly two decades ago, when Australia’s government started selling or leasing federally owned infrastructure to the private sector and then had sub-national authorities use the money to build new infrastructure.
In 2002, Sydney’s airport, which had 41.9 million passengers in 2016, was sold to the private sector for $3.2 billion, well above the initial asking price. Based on this amount — and given the rate of inflation and other factors specific to the Washington area — the region could expect to see an influx of anywhere from $10 billion to $12 billion.
The United States already has an operating program for airport privatization, but only two out of the country’s roughly 500 commercial passenger airports have been privatized under it. The original law limits the number of airports in the program and gives legacy air carriers such as American, United and Delta veto power over planning decisions, undermining any incentive to work out growth plans with local airports.
By the end of this decade, both Dulles and National will be near the end of major infrastructure investments that will increase their sale and leasing value. National is starting a $1 billion upgrade that will deliver a new concourse and faster security screening by 2021. Metro’s extension of the Silver Line to Dulles will be completed in 2020, which will dramatically improve the airport’s access for travelers.
Some critics have thrown cold water on the project, arguing that the current management structure of the nonprofit Metropolitan Washington Airports Authority and its $4.5 billion of debt will complicate matters.
But the point of federal legislation is to remove the political roadblocks that may otherwise grind negotiations to a halt. In Australia’s case, the federal government began an asset “recycling” program that gave states and territories an extra 15 percent of the sale or list price of an asset if all the money was reinvested in new infrastructure. If a similar program were developed here, few jurisdictions would be able to pass up such “free money,” even with strings attached.
Say what you will about Trump, but he likes infrastructure so much that he may allow an infrastructure windfall to rain upon a region despite the fact that many of the inner suburbs and D.C. proper voted overwhelmingly against him in 2016. Residents of the D.C. “swamp” would likely come to appreciate the new infrastructure. They may even name something in the District after him once he leaves office. Maybe.
Image credit: Rob Wilson
