“If any U.S. city wanted to do a deal for its airport, there’d be a line of investors down the block tomorrow,” says DJ Gribbin, an infrastructure consultant who was the architect of the Trump administration’s 2018 plan to repair America’s aging roads, bridges, tunnels, and, also, airports. “There are literally hundreds of billions of dollars sloshing around investment markets wanting to invest in U.S. infrastructure today,” Gribbin added.
Airports operate almost as two different businesses. On the aviation side, airports are like a nonprofit that’s supported by the airlines. By law, whatever it costs an airport to keep planes and passengers moving in and out all year long must be offset, exactly, by fees paid by the airlines. If an airport spends $100 million on aviation, the airlines pay the airport $100 million.
The non-aviation side of the business—the part that’s like a shopping mall with airplanes parked outside—can make a profit from rent paid by shoe shiners and coffee shops, or from parking fees and the like. Back in the good flying times of 2017, for instance, Dallas/Fort Worth International Airport (DFW) brought in $841 million in revenue from various rents and fees and reported $69 million in operating income (that’s profit, basically).
But the cities of Dallas and Fort Worth, which spent at least $8 billion in today’s money to turn a massive patch of prairie scrub into one of the world’s biggest airports, didn’t get one nickel of that. No city owner would have. The Federal Aviation Administration (FAA) does not allow local governments to use any money from non-aviation profits for anything other than reinvestment in the airports themselves. A city can’t build a baseball diamond with the profits of its airport. It can just build more airport.
If privatization seems extreme or perhaps unsafe, consider that, under FAA rules, U.S. cities, counties, and other public entities can’t actually sell off the runways, terminals, and land that make up their “commercial service airports,” the kind that most of us use to catch a flight. What they can sell are long-term leases to let private companies operate everything at an airport. And the outside operators would still be beholden to the FAA and the Transportation Security Administration and various regulations applied to every U.S. airport. You won’t be able to smoke on a flight out of Las Vegas just because McCarran International goes private.
Read: There are two types of airport people
So why don’t governments jump at the chance? Local governments do get tax revenue from airports, which they can use for whatever purpose they wish. That’s often not a huge sum, though. In 2017, when DFW reported $841 million in revenue, the city of Dallas—which owns 64 percent of DFW to Fort Worth’s 36 percent—got just $7.1 million from taxes generated at the airport. That money would barely have covered the city’s $6.9 million outlay for municipal-court administrative services that same year. Incidentally, privatization agreements can easily be structured to deliver municipalities money post-sale, in the form of revenue or profit sharing with private operators. A privatized DFW sharing just 2 percent of revenue in 2017 would have netted the city of Dallas both its $7.1 million in taxes and $10.7 million in revenue sharing.