Owais Crawford
The DFW Airport, jointly owned by the cities of Dallas and Fort Worth, has been the subject of debate regarding its potential sale or privatization. While federal law prohibits the outright sale of a public airport, long-term leasing to private operators is a viable option. Proponents argue that this could generate significant revenue for the cities, with estimates suggesting billions of dollars in upfront payments and annual receipts. The funds could address various challenges and infrastructure needs in Dallas and Fort Worth. Additionally, privatization could eliminate certain charges for passengers and airlines, enhancing the airport experience. However, the proposal requires support from multiple stakeholders, including the cities, airlines, and the Federal Aviation Administration, and careful consideration of the potential benefits and drawbacks.
| Characteristics | Values |
|---|---|
| Reason for selling | To raise big money for Dallas and Fort Worth |
| Who wants to sell it? | D Magazine |
| Who supports the idea? | Dallas Mayor Mike Rawlings, infrastructure consultant DJ Gribbin, and former Dallas City Attorney Larry Casto |
| Who opposes the idea? | Fort Worth Mayor Betsy Price, DFW board member Donohue |
| How much money could it raise? | $5.3 billion upfront for Dallas and $3 billion for Fort Worth, then up to $14 million each year for Dallas and $8 million for Fort Worth |
| What could the money be used for? | Filling potholes, maintaining parks, rebuilding infrastructure, restoring neighborhood connectivity, and shoring up pension funds for police and firefighters |
| What would it mean for passengers? | Private operators would no longer need to charge passengers for debt payments on Skylink trains or Terminal D |
| What would it mean for the airport's debt? | Federal law requires airport debt to be paid first from the cash, so the private operator might be able to pass the savings of debt-free operating costs on to travelers and airlines |
| What would it mean for the cities' tax benefits? | Dallas Mayor Mike Rawlings has been pushing to try to figure out how to get tax benefits back to the City of Dallas |
| What are the legal considerations? | Federal law does not allow selling a public airport to private owners, but it does allow a very long-term lease and recent changes in federal rules have made airport privatization easier |
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What You'll Learn
The cities of Dallas and Fort Worth could raise billions
Selling the airport could bring in a lot of cash to address the challenges faced by both cities. The money could be used to fix potholes, maintain parks, rebuild infrastructure, restore neighborhood connectivity, and bolster pension funds for police and firefighters.
The airport's real estate, which is larger than Manhattan Island, also presents development opportunities. There is plenty of land that is not needed for aviation, and over the past decade, the airport has started constructing buildings and other infrastructure on this land.
The idea of selling the airport has been met with some opposition. Fort Worth Mayor Betsy Price has expressed support for the current arrangement, stating that it is the best way for the airport to serve the North Texas region. The change would also require support from airlines and the Federal Aviation Administration. However, the recent changes in federal rules have made airport privatization easier, and investors have shown interest in investing in U.S. infrastructure.
While there are challenges and considerations to address, the potential for significant financial gains makes the privatization of Dallas-Fort Worth International Airport a proposal worth exploring.
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There are investors interested in the deal
The CEO of Dallas-Fort Worth International Airport, Sean Donohue, has been approached by financiers at aviation conferences expressing interest in buying the airport. These investors are from France, Mexico, Vancouver, or other places. While Donohue has brushed off the idea, it is a viable one. If the cities of Dallas and Fort Worth and American Airlines agreed, and if a group of investors could raise enough cash (in the billions), the deal could be done.
The interest from investors is not surprising. DFW Airport is worth billions, yet it brings in a relatively small amount of money for Dallas and Fort Worth. In 2017, DFW's concessions (restaurants, hotels, car rentals, etc.) brought in $447 million. As the airport grows, those revenues will increase. Additionally, there is a precedent for airport privatization in the United States. For example, San Juan International Airport in Puerto Rico was privatized in 2012 and is still privately run.
The potential financial benefits of privatization are significant. Selling DFW Airport could bring billions of dollars to Dallas and Fort Worth, which could be used to improve infrastructure, maintain parks, and shore up pension funds for essential workers. Additionally, a private operator would no longer need to charge passengers for things like debt payments on Skylink trains or Terminal D.
With cities struggling financially in the wake of the pandemic, the time may be right to attract investors and secure much-needed funds.
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The airport's real estate could be better utilised
The DFW airport's real estate could be better utilized by generating more revenue for the cities of Dallas and Fort Worth. Currently, the airport's revenues come primarily from charging airlines for the cost of moving their planes and passengers and from various concessions such as restaurants, hotels, car rentals, and ground transportation services. While these sources provide significant income, there is an opportunity to maximize the airport's potential by attracting private investors.
Privatizing the airport's operations could bring billions of dollars to Dallas and Fort Worth. This money could be used to address various city needs, such as infrastructure improvements, neighbourhood connectivity restoration, and strengthening pension funds for essential workers like police officers and firefighters. Additionally, privatizing the airport would eliminate the need to charge passengers for debt payments, enhancing the airport experience.
The potential for substantial financial gains through privatization is evident. According to DJ Gribbin, an infrastructure consultant, there is no shortage of interested investors, with "hundreds of billions of dollars sloshing around investment markets wanting to invest in U.S. infrastructure." This interest presents a lucrative opportunity to sell or lease airport real estate to private companies, generating significant income for the cities.
Furthermore, the airport's real estate could be better utilized by exploring mixed-use development opportunities. The vast land area surrounding the airport could be redeveloped to include commercial, residential, and entertainment options. This could create a vibrant, mixed-use district, providing additional revenue streams for the cities and enhancing the overall airport experience for travellers.
By embracing privatization and innovative real estate strategies, the DFW airport can maximize its potential, generating significant economic benefits for Dallas and Fort Worth while also improving the airport's facilities and services.
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The cities could use the money to improve infrastructure
The cities of Dallas and Fort Worth could benefit from an influx of cash by selling the Dallas-Fort Worth International Airport, also known as DFW Airport. While federal law does not allow selling a public airport to private owners, it does permit long-term leasing. A 40-year lease to a private operator could bring in billions of dollars in upfront payments for the cities, with Dallas potentially receiving $5.3 billion and Fort Worth $3 billion. This could be used to improve infrastructure, such as filling potholes, maintaining parks, and rebuilding neighbourhood connectivity.
The airport's real estate, which is larger than Manhattan Island, offers significant development opportunities beyond aviation. The airport's cost centre, which includes concessions like restaurants, hotels, car rentals, and ground transportation services, generated $447 million in 2017, and this revenue will continue to grow as the airport expands.
Selling the airport, or rather leasing it to a private operator, could relieve the cities of the burden of airport debt. The private operator could pass on the savings of debt-free operating costs to travellers and airlines, potentially resulting in lower charges for passengers. Additionally, the cities would receive a portion of the taxes collected from the airport's operations, providing ongoing revenue for infrastructure improvements.
By privatizing the airport's operations, the cities of Dallas and Fort Worth could access the significant investment capital available in the market. Infrastructure consultant DJ Gribbin, who worked on the Trump administration's plan to repair America's infrastructure, highlights the interest from investors: "There are literally hundreds of billions of dollars sloshing around investment markets wanting to invest in U.S. infrastructure today."
While there are challenges and considerations, such as the need for support from airlines and the Federal Aviation Administration, the potential benefits of improved infrastructure and increased revenue for the cities make a compelling case for exploring the privatization of DFW Airport.
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The airport's operations could be privatised, not sold
The privatisation of DFW Airport's operations could be a more viable option than selling the airport outright. While the airport is jointly owned by the cities of Dallas and Fort Worth, privatisation would not affect their ownership but would bring in much-needed revenue. The cities would continue to receive a share of taxes collected, but the privatisation of operations could also bring in billions of dollars in upfront payments and future revenue-based payments. This money could be used to improve infrastructure, maintain parks, and shore up pension funds for essential services.
The Federal Aviation Administration (FAA) has no limit on the number of airports that can be privatised, so there is a real opportunity for Dallas to take advantage of this. A private operator would also no longer need to charge passengers for debt payments, which could encourage more people to use the airport.
The privatisation of airports has been successful in other parts of the world, with India being a prime example. The country privatised its two largest airports, Delhi and Mumbai, in 2006, and this has resulted in impressive growth in passenger traffic. The privatisation process was based on a public-private partnership (PPP) model, with the Airports Authority of India (AAI) holding a 26% stake and the remaining 74% going to a private company selected through an open and transparent competitive bidding process.
However, it is important to note that the privatisation process can be complex and bureaucratic, and employee unions may pose a hurdle, as seen in India. The government must also be mindful of the potential lack of interest from bidders, especially if the financial expectations from the private sector are high. Nevertheless, with the right approach and careful planning, the privatisation of DFW Airport's operations could bring significant benefits to the cities of Dallas and Fort Worth.
In conclusion, while selling the airport outright may not be a viable option, privatising its operations offers a range of potential advantages. This includes increased revenue, improved efficiency, and the ability to reinvest in the community. Therefore, it is worth considering the privatisation of DFW Airport's operations to unlock its full potential and bring about positive changes for the cities it serves.
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Frequently asked questions
Privatizing DFW's operations could bring billions for the cities of Dallas and Fort Worth. The money can be used to rebuild infrastructure, restore neighbourhood connectivity, and support pension funds for police and firefighters.
A 40-year lease to a private operator could net an upfront payment to Dallas of $5.3 billion and $3 billion to Fort Worth. Then Dallas might receive up to $14 million each year and Fort Worth $8 million.
Federal law does not allow selling a public airport to private owners. However, it does allow a very long-term lease. The change would also require support from airlines and the Federal Aviation Administration.
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