Emmett McCann, bio
Privatization of San Juan Airport
Moves to FAA for Comments
By Debby McElroy
The ACI-NA Board of Directors meeting featured a briefing on the expected privatization of Luis Muñoz Marín International Airport (LMM Airport) in Puerto Rico. Emmett McCann, Managing Director at Highstar Capital, a longtime veteran of transportation public private partnerships, discussed how Aerostar Airport Holdings LLC, a 50-50 joint venture between Grupo Aeroportuario del Sureste (ASUR) and Highstar Capital plan have worked with FAA and the airlines to make the first privatization program in the United States in more than a decade, be successful.
By way of background, a pilot program for airport privatization was included in the FAA Reauthorization of 1996, authorizing up to five airports to participate. (The FAA Modernization and Reform Act of 2012 increased the number of slots in the program to 10, an increase long advocated by ACI-NA.) Only New York’s Stewart Airport had been approved to go private under the pilot program; in 2000 National Express Group won a 99-year lease. However, in early 2006, National Express decided to abandon its airport division and sold its lease at Stewart to the Port Authority of New York and New and New Jersey.
McCann indicated that in total, the airport privatization will provide the Puerto Rico Ports Authority and the Commonwealth of Puerto Rico approximately $2.6 billion over the life of the 40 year lease. Aerostar Airport Holdings will provide an upfront payment of $615 million as well as a $6 million payment to the Puerto Rico Air Travel Promotion and Support Fund.
The most exciting news is the expected upgrade to LLM Airport. More than $1 billion in new capital expenditures are expected, with almost $200 million in the first three years of the lease. This includes significant airfield and terminal improvements and a significant enhancement of the food, beverage and retail concessions offered to travelers.
McCann indicated that federal approval for the privatization could come by the end of the year, culminating a three-year process which began in December 2009 and most recently saw Aerostar selected from a total of six bidders to manage the airport. FAA is expected to issue a formal request for comments on the privatization next week.