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Privatization of first US airport could bank 2.5 billion dollars
2008-09-30
CHICAGO (AFP) - The privatization of the first major US airport could net the city of Chicago 2.5 billion dollars, officials said Tuesday. The 99-year lease of Chicago's secondary airport, Midway, must still be approved by the city council and federal regulators but officials expressed confidence it would pass. "With this agreement in place, the question next becomes how we will use the discretionary portion that is available to us once Midway debt has been paid," Mayor Richard Daley said. "This transaction will provide unprecedented benefits for the traveling public, the airlines and the taxpayers of Chicago." While many European airports were privatized years ago, all commercial airports in the United States are currently operated and owned by local or state governments. Midway was the first major hub airport to apply for privatization approval since the US Congress established a pilot program in 1996 to explore the use of private operators at commercial airports. Five smaller airports have applied to be privatized but four later withdrew their applications and one application was terminated, according to the Federal Aviation Administration. Midway Investment and Development Company, LLC (MidCo) beat out bids from five other consortiums, which include firms from France, Australia, Germany, Canada and Spain, to lease the airport. MidCo is a consortium consisting of US-based Citi Infrastructure Investors and John Hancock Life Insurance Co and Canada's YVR Airport Services Ltd., which owns and operates 18 airports on three continents. "The long-term concession and lease of Chicago Midway International Airport represents a landmark, long-term airport privatization opportunity in the United States," MidCo said in a statement. "MidCo was attracted to this opportunity given the existing world-class airport facilities." The city of Chicago will continue to provide all police and fire services at the airport and the federal Transportation Security Administration continue to perform all of its current functions in passenger screening and other areas. The transaction will go to the city council for approval on October 8. If it passes the FAA requires at least 60 days to review the application. The city will retain control over its primary airport, O'Hare, which handles 76 million passengers a year. Midway's five runways handled nearly 304,000 flights and more than 19 million passengers last year. Chicago is leading the nation in the privatization of city services. It was the first city to lease a major piece of infrastructure in 2005 with a 1.8 billion dollar deal for the right to manage a key toll bridge for 99 years. In February, the city offered up its 360,000 parking meters for lease after having rented out four of its parking garages to private operators.
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