FLY314 became an official project of Grow Missouri, Inc., a social welfare (501C4) organization, with the signing of this transmittal letter to the Federal Aviation Administration (FAA) on March 22, 2017. If approved for one of ten limited slots under this 1997 federal law, Saint Louis city residents would have a chance to give our airport “a shot in the arm.”
“This is a great opportunity to explore a public private partnership for the airport. I appreciate their consideration of our application and look forward to working with the FAA throughout the process, but as always, the key is in the details.”
“Today’s [April 24, 2017] announcement to accept the St. Louis Lambert International Airport’s preliminary application to participate in FAA’s Airport Privatization Pilot Program demonstrates the administration’s commitment to leveraging innovative financing strategies to revitalize our nation’s aviation infrastructure.” … “As we’ve already seen in San Juan, this approach to airport management increases productivity, revenue and operating efficiency for airports, creating greater access to capital for infrastructure needs.”
“We congratulate DOT for this accomplishment [upon approval of the FAA preliminary application for St. Louis Lambert Int’l Airport], and look forward to continuing our work with them to modernize our nation’s infrastructure and ensure an airline system that works on behalf of all Americans.”
“The privatization pilot program was designed to encourage innovative financing solutions, and we’re pleased that an increasing number of airport operators are participating.”
“This is a huge deal for the STL region, an airport with proper management and direct flights internationally would mean a lot for every county around St. Louis!” (when sharing the St. Louis Business Journal Editorial “Airport’s future rests with business demand” via LinkedIn April 28, 2017}
Since the dawn of aviation government has played an important role in advancing the industry as well as keeping our skies safe. Today, more than 900 million yearly passengers board U.S. based flights and the costs of maintaining that mandate have continued to rise....
St. Louis is in a rare position of leadership. The push to privatize Lambert airport is risky; the federal program being considered is largely unproven, and an expensive application process could fail for many reasons or drag for years. But former Mayor Francis...
ST. LOUIS (KTVI) - The City of St. Louis moves one step closer to putting its airport under private management. On Monday, the FAA approved giving St. Louis-Lambert International Airport one of 10 slots available in its airport privatization pilot program. This means...
How would the airport get approval for a private operator?
Any plan advanced would be subject to:
- Federal Approval (FAA)
- Local Approval (City)
- Airline majority approval (KSTL)
This process can take at least a year to build, select and complete.
For more information: Title 49 USC § 47134
Why is Fly314 doing this?
Who is Fly314?
Who owns the St. Louis-Lambert International Airport now?
The City of St. Louis.
The airport is surrounded within St. Louis County, but the City of St. Louis owns the airport. When the airport was first created under the vision of Albert Bond Lambert, and with his private financing, they needed an area away from the populace for this then-innovative concept of an airfield. The land needed was outside the City of St. Louis boundaries within St. Louis County, the site where the airport is today.
Would St. Louis City still own the airport under this application?
St. Louis City would still own the airport, but it would be privately managed to allow for innovation and transfer of funds to the City for other purposes and expansion of economic development opportunities – it would be good for the airport, good for the City and good for the region.
What is the timeframe? How long will this take?
It could take up to two years for full approval.
This is a long process subject to many layers of approval:
- Federal approval (by the FAA)
- Local approval (by the City)
- Airline majority approval (required by federal statute)
Is the City committing to something the City can’t get out of?
In order to allow the City to “get into the game” of airport innovation, the City must first ask the FAA to hold one of the slots in the pilot program for the St. Louis-Lambert International Airport. The City can opt out of this at any point. The City and its stakeholders should agree that this is good for the airport, good for the City, or good for the region.
How much money are taxpayers footing for the exploration of this process?
In the event that a private operator would get the final approval to operate the airport, that entity would reimburse the city’s costs associated with this transaction.
How do taxpayers support the airport now?
What does the City get from the airport now?
What will the City and its taxpayers get for this public-private partnership?
New money to spend on City need as determined by the City leadership.
The City could get either a one-time lump sum cash payment and/or yearly cash payments estimated to be 4X to 10X current revenues under the life of the lease agreement. Plus, the risk and debt of the airport would likely be transferred from the City to the private operator, which will also benefit City taxpayers.
How much money will this generate for the City? Who gets to decide where that money goes? By what process?
What happens to the airport’s debt?
Will this process be transparent?
Once the City advisers responsible for managing the process are complete, a broad number of stakeholders will have many months to determine community needs, airport priorities, and workforce protections. Ultimately, the Board of Estimate and Apportionment (E&A), along with the City Board of Aldermen, would have to agree and pass the terms of any long-term lease.
There are also several stages of approval at the federal level, and the FAA will hold a public hearing.
Has this been done in other cities? If so, what was the result?
YES. This project has been successful in San Juan, Puerto Rico. Plus, Westchester New York’s airport announced its plans to pursue a public-private partnership in Nov. 2016.
For example, with the San Juan International Airport, Puerto Rico received $615 million upfront in a lump sum payment, the private operator agreed to invest $1.4 billion in the airport over the term of the lease, and the operator will also share airport revenue with the government, estimated at $552 million in exchange for the 40 year lease. The transition was smooth, all airport employees who wanted to continue working kept their jobs, and the operator has already completed a $148 million renovation.
This process has proven to be effective world-wide, especially in Europe. Over 40% of European airports have at least some private shareholders, which also handle three out of every four passengers. (Airports Council International-Europe, 2016 study)
If the private operators go bankrupt, will the Airport stop its operations?
The FAA’s requirements and federal statutes clearly address this concern, requiring that in order to approve the transaction the Secretary of Transportation must find that the “operation of the airport will not be interrupted in the event that the … lessee becomes insolvent or seeks or becomes subject to any State or Federal bankruptcy, reorganization, insolvency, liquidation, or dissolution proceeding or any petition or similar law seeking the dissolution or reorganization of the purchaser or lessee or the appointment of a receiver, trustee, custodian, or liquidator for the purchaser or lessee or a substantial part of the purchaser or lessee’s property, assets, or business.” Section (c)(2).
The FAA’s procedures also expressly address this concern. The FAA Notice requires that as part of the Final Application the sponsor and chosen private sector operator must provide a description of “how the private operator, the public sponsor, or both will address the … [c]ontinued operation of the airport in the event of bankruptcy or other financial or legal impairment of the private operator, in accordance with the specific terms of § 47134(c)(2).”
The FAA goes on to say that the Final Application should include “any provision for reversion to the public sponsor” as well as “a legal opinion and certification that the proposed plan will be effective under operation of all applicable law, including but not limited to bankruptcy law, in assuring the continued operation of the airport.”
In prior airport transactions under the Airport Privatization Pilot Program, the private sector operator has provided the FAA with a legal opinion of outside bankruptcy counsel stating that in the event that such operator becomes a debtor in a bankruptcy case under title 11 of the United States Code, the sponsor will be permitted to gain entrance to the airport and to operate the airport without regard to the “automatic stay” under Section 362 of the Bankruptcy Code such that the sponsor would be entitled to commence or continue an action or proceeding to enforce its police or regulatory power in order to ensure that the operations of the airport would not be interrupted. The City intends to require its chosen private sector operator to provide a similar legal opinion to both the City and the FAA.
Isn’t this program only for airports in financial trouble?
Airports do this to increase efficiency, attract private innovation and funding, and to free up funds from the airport for other important City needs such as transportation and more.
Will this impact union employees at the airport?
Federal law requires that collective bargaining agreements are not touched by the lease, and the FAA can enforce the law. The City can place any kind of worker requirements for all workers inside the contract with the chosen private operator selected.
Will this impact security and safety at the airport?
Security standards remain the same regardless of who operates the airport.
Will the new operator have the power of eminent domain?
Can the new operator sell its lease of the airport?
How might this impact other operations at the airport?
Innovation could benefit economic development. Ideas include things like cold chain storage, USDA port of embarkation, and a dual custom/cargo clearance facility.
Does this have any effect on St Louis County? Will some of the money go to surrounding counties?
It depends upon what happens after final approval. Capital transferred out of City airport grounds could be applied for other municipal and/or regional purposes. If economic development partnerships were increased in and around the airport, most would expect that new activity to benefit the county as well as the City.
Do you need support from Missouri’s U.S. Senators and Representatives? Does the City have it?
Support from our congressional delegation is not required but the City and Fly314 will ask for their support.
Missouri’s congressional delegation historically has provided strong support for the innovation of the airport. For example, in the 1970s when there was a movement by some to replace Lambert Airport, deeming it obsolete, Missouri’s congressional delegation successfully opposed that proposal. In more recent times, eleven years ago, Missouri’s congressional delegation successfully supported the W1W runway expansion. With their support on this important initiative they will help lead Lambert Airport and regional economic development into the future.
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INSTRUCTIONS: Media materials contained in this FLY314 Press Kit include a press release as well as various sizes of the official FLY314 logo.
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- Federal Register – Airport Privatization Pilot Program: Preliminary Application for St. Louis Lambert International Airport, St. Louis, MO
- FAA – Fact Sheet – Airport Privatization Pilot Program
- City of Saint Louis Preliminary Application for Airport Privatization Pilot Program