Forget a new lease: Charlotte airport should be privatized

On Monday, the Charlotte City Council will vote on the new lease agreement at Charlotte Douglas International Airport (CLT), a $2.1 billion contract and investment plan with hub airlines that will be in place for the next 10.5 years. The lease renewal is opposed by unionized airport staff, who say poor working conditions and American Airlines’ dominance will make workers worse off and lead to higher fares for flyers.

There’s another avenue the city council could explore. What if the city council considered something even more radical to settle its union conflict, invigorate competition, and attract new investment to the Charlotte area?

The city council should consider using its leasing power to privatize parts of Charlotte airport.

It may sound off the wall, but leasing CLT to a group of private investors would free elected city council members from having to play in airline and airport politics and leave that to investors with skin in the game. It would give free enterprise a chance at better managing the travel experience for Carolina travelers.

There is some appetite for change. In 2013, the state legislature attempted to transfer authority of the airport from the City of Charlotte to an independent public body, but the plan was shelved because the FAA never gave approval. But opening the airport to private operators is a different, more efficient idea.

The plan isn’t so radical if you consider there is a path. Under the FAA’s Airport Investment Partnership Program, there is an outlined process for a publicly owned airport to be leased out to private operators. Puerto Rico’s San Juan airport began this process in 2013, leasing its operations to a private consortium comprising international investors and pension funds.

Since then, the transfer has been recognized as a major success, drawing millions in new investment, more passenger traffic, and significant tax benefits to the island territory. If Puerto Rico can have the courage, why couldn’t Charlotte be the next airport privatization project in America?

President Trump has already accelerated the privatization of the TSA’s screening duties at select airports to save costs, and the FAA has said that further airport privatization should be considered to boost investment.

And as counterintuitive as it may seem when it comes to who owns and operates airports, the US is more of an outlier. Most airports in our country are owned and operated by local transit authorities or government agencies, while elsewhere, they’re treated like a true business.

Worldwide, many airports are owned by private consortia or public-private partnerships, in which governmental bodies own shares alongside investors.

According to the Airport Council International, 41% of European airports have some private sector involvement in airport ownership and those airports handle nearly 75% of all passenger volume on the continent. In fact, many European airports list shares on the public market that investors can buy and hold. Here, meanwhile, the list of American airports under some form of private ownership is less than 1%: San Juan and Branson, Missouri.

How could Europe be more capitalist on this issue than America?

There are obviously many roadblocks to this grand privatization plan. As a major carrier operating most flights at CLT, American Airlines would need to approve the plan. Airport debts would have to be settled before any transfer, and borrowing would be more constrained for any future private investor than it has been for a public entity.

Considering the rancor that has been seen over the union protests in the airport deal, perhaps the appetite for privatizing an airport wouldn’t be enough to catch on. But for Charlotte, reducing costs, attracting investment and avoiding labor strife is an attractive deal. Why not be bold and try something new?