2 min read
Posted on 11.27.10
  • 2 min read
  • Posted on 11.27.10

Lt. Governor Peter Kinder has suggested that the City of St. Louis, which owns and operates Lambert Airport, consider selling it to private investors. He argues that such a sale would make the airport "a better, more passenger-friendly place" and would help the city's finances.

It isn't a bad idea, but there are some facts to be considered first. The Federal Aviation Administration asserts jurisdiction over airports. Unless it changes its rules, the FAA would not allow the City to sell Lambert and use the proceeds for anything other than the airport itself. The FAA calls that "revenue diversion." So, unless that changes, selling the airport would not help the City's finances.

It isn't the best time to sell any asset. If the FAA decided to change its mind and allow revenue diversion, you would not sell an asset like Lambert at the bottom of the market, which is where we are now.

Privatizing the airport doesn't address the underlying issue with Lambert. Lambert has fewer flights because of the (really, really) bad economics of the airline business. First, Carl Icahn weakened TWA. Then, American Airlines bought the weakened TWA. So, St. Louis lost the TWA hub and the scores of connecting flights. Then, American Airlines itself lost a lot of money and decided to sharply cut back its service at Lambert. Private owners won't change any of that.

Assuming several of the facts above changed, selling the airport might be good for the City. But, a sale to a private entity would almost certainly meet some regional skepticism. The decisions of privately-run airlines have not pleased the region. Would the decisions of a privately-run airport? What if the new ownership decided it did not want the China Hub in St. Louis? What if it decided to charge more to use the airport so it could make a bigger profit? A better "sell the airport" solution would be for the rest of the region to buy the airport and operate it regionally. The airport is an important component of the region's transportation infrastructure, and along with the other airports, ports, roads, bridges and public transit system it really belongs in a regional transportation agency that can plan for and market the region effectively and efficiently.

Short of that outcome, which seems distant, the City will continue to own and operate the Lambert. Airport director Rhonda Hamm-Niebruegge is in the middle of some major changes to the terminals at Lambert that will improve passenger and tenant experiences. Lambert and the business community are working to quantify demand in order to attract more flights. And, I am working with other regional leaders to coordinate the governance of all of our public infrastructure, including the airport.

That is, I think, the more useful and timely direction.