US airport privatisation prospects boosted by additional slots, but is the demand there?

There are a number of factors weighing on the prospects for what, so far, has not been a successful stab at privatising America's airports in a 'pilot' programme that is now 16 years old. They include delays to reauthorisation of the bill that funds airport projects through the FAA's Airport Improvement Programme; the lapse of the emergency regulation that removed the application of the Alternative Minimum Tax to airport bonds; lingering suspicion in too many local and regional government departments as to the motives of private investors (especially foreign ones); and most recently a change in the law that permitted an extension in the number of privatisation 'slots', irrespective of the demand, and which is at least one positive development.

Congress finally agreed on a four-year bill to 'reauthorise' the activities of the Federal Aviation Administration (FAA) after no less than 23 short-term extensions had been made since the previous one expired in Sep-2007. However, the nature of the legislation means that four FAA accounts are frozen in the light of the economic and financial downturn, including the air traffic control modernisation programme and the Airport Improvement Programme (AIP). The level of the AIP has been reduced as well, by USD165 million to USD3.35 billion.