11 March 2008

Here’s a novel thought – privatize US airports.

For more years than many of us can remember the US Government has had a secret tax on airlines. The tax 8-10% on airline tickets was designed to cover the cost of airport and airways improvements including terminals and runways. Actually it was used to provide billions of dollars in funds that went directly to the federal coffers and never to the intended purpose. When the money didn’t get to the airports – local authorities within the States and cities who own and run the airports started to institute PFCs – Passenger Facility Charges. These charges now comprise a revenue form for the airports. But not necessarily for the use they were intended. The situation of poor management by the FAA and the lack of funding has resulted in capacity constraints in the US Air Transportation System at the airport level. This is now the bottleneck and not a solution in sight.

So now I would like to suggest an alternative solution to the problem in total. Rather than yet another half hearted attempt at a solution – I think we should try and address the problem once and for all.

So my proposal is straightforward and I hope simple. Privatize the airports.

This has occurred in many different parts of the world but the US model seems to not have adopted this novel idea. However the concept is not so easy given the different ways in which funding attempts are handled. There needs to be both an obligation and a method to ensure that funding occurs on a regular and consistent basis. To this end the privatization needs to also cover a long term set of goals – meeting the needs of growth and safety. The only way this is going to happen is if there is a secure funding method that kick starts the whole process. So the recommendation is to add Government backed bonds rather than funding from the Government. But from the moment that is offered then the revenue to the Feds ceases and the funds can then flow correctly.

This will require the US Congress to be able to make some smart decisions. Lets hope that this can happen soon. Then finally we can get new infrastructure – gridlock will be relieved… sometime this century. We can but hope



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