For Immediate Release
June 5, 2020
Contact: Marcia Alexander-Adams
The 1996 Reauthorization Act, Title 49 United States Code §47134, authorized the Federal Aviation Administration (FAA) to establish an airport privatization pilot program limited to five airports. The 2012 Reauthorization Act increased the number of airports that could participate in the program from five to 10. The 2018 Reauthorization Act removed the limitation on the number of airports, effectively ending the pilot program, and renamed it the Airport Investment Partnership Program (AIPP). Through this initiative, commercial service airports can only be leased and general aviation airports can be sold or leased. The AIPP continues to permit airports to explore privatization as a means to generate access to sources of private capital for airport improvement and development. Local or state governments own and operate most commercial service airports in the United States. Public-use general aviation airports are both publicly and privately owned.
Airports in the AIPP
Hendry County Airglades Airport (2IS)
Airglades Airport, a general aviation airport in Clewiston, Florida, is located 80 miles from Miami International Airport. Hendry County owns and operates the airport and it has a 5,603-foot runway, a general aviation terminal, and hangars. The FAA approved Hendry County’s preliminary application on October 18, 2010.
Status: Hendry County and Airglades Airport, LLC submitted a a final application on August 8, 2019. The FAA issued the Record of Decision on September 30, 2019.
Luís Muñoz Marín International Airport (SJU)
Luís Muñoz Marín International Airport, a medium-hub airport, is owned and operated by the Puerto Rico Ports Authority. The FAA approved the Authority’s final application for the Luís Muñoz Marín International Airport on February 25, 2013.
Status: Aerostar Airport Holdings is operating the airport under a 40-year agreement with the Puerto Rico Ports Authority.
AIRPORT INFORMATION IN THE DOCKET
To review information on the airports submitted to the docket go to: www.regulations.gov.
Hendry County Airglades Airport — FAA Docket Number 2010-1052
Luís Muñoz Marín International Airport — FAA Docket Number 2009-1144
AIRPORT PRIVATIZATION FACTS
What does FAA’s acceptance of the preliminary application mean? An airport sponsor who wants to participate in the Airport Investment Partnership Program must receive preliminary FAA approval through an application process. Once the FAA accepts the preliminary application for review, the sponsor can select a private operator to manage the airport, negotiate an agreement with the private operator, and prepare a final application for submittal to the FAA.
Application process. A public airport sponsor and the private operator selected to purchase or lease an airport may request participation in the program by filing an application for exemption under Title 49 United States Code § 47134(a).
- A public sponsor may submit a preliminary application for FAA to accept for review . It must contain summary narratives identifying the objectives of the privatization initiative, a description of the process and a realistic timetable for completing the program, current airport financial statements, and a distribution ready copy of the request for proposal/qualifications. The FAA has 30 days to review the preliminary application.
- The airport sponsor may select a private operator, negotiate an agreement, and submit a final application to the FAA. There is no timeline for the FAA to complete its review of the final application.
- After the FAA reviews and accepts the final application and lease agreement, it publishes a notice in the Federal Register for public review and comment period. During this period, the Department of Transportation, FAA, and Transportation Security Administration (TSA) may conduct a public meeting in the community to solicit public comment.
- The FAA completes its review, prepares its Findings and Record of Decision (ROD), addresses the public comments in the ROD, and publishes the agency decision.
- If the FAA approves the privatization application in the ROD, it monitors the legal settlement and transfer of the airport from public owner and sponsor to the new private operator and sponsor.
Number and Category of Airports. The legislation no longer limits the number of airports that may participate in the program. Under the AIPP, general aviation airports may be leased or sold, but a commercial service airport may only be leased.
Multiple Airports. An airport sponsor may submit an application for multiple airports under its control if they are located in the same state.
Partial Privatization. A purchaser or lessee may be an entity in which a sponsor has an interest. Under the program, this applies to a transaction for the whole airport, and not a specific facility.
Exemption from federal requirement. The 1996 Reauthorization Act permits the FAA to exempt an airport sponsor from certain requirements. First, the public airport sponsor may receive an exemption to use the lease or sale proceeds for non-airport purposes. Generally, all proceeds from the lease or sale of airport land must be used for the capital or operating costs of the airport. This exemption requires the approval of 65 percent of the air carriers at the airport (by number of carriers and by landed weight). If an exemption is granted to an airport sponsor from the requirement to use airport revenues for non-airport purposes, the obligation to repay federal grants must also be waivered and the FAA must grant an exemption to the private purchaser or lessee to allow the purchaser or lessee to earn compensation from operation of the airport.
Conditions for granting exemptions. The FAA’s approval is based on a number of conditions listed in Title 49 United States Code § 47134. These include the private operator’s ability to assume the public operator’s grant obligations and ensure continued access to the airport on reasonable terms. The private operator must operate the airport safely, maintain and improve the airport, charge reasonable fees, provide security, mitigate noise and environmental impacts, and not abrogate[NE(1] existing collective bargaining agreements covering airport employees. The lease agreement must provide a plan for continued operation of the airport in case of bankruptcy of the private operator.
Federal financial assistance. The FAA may fund a sponsor’s grant or series of grants up $750,000 for predevelopment planning costs related to preparation of a privatization application or draft application. Airport Sponsors should consult their local FAA Airport District Offices. The private operator of an air carrier airport may also receive Airport Improvement Program (AIP) grants and collect Passenger Facility Charges. Under the Program, private operators of large and medium hub airports are entitled to the same level of grant participation as public sponsors. Large and medium hub airports grants are 75 percent federal and 25 percent local; small and non-hub airports are 90 percent federal and 10 percent local. AIP discretionary grants for private operators are 70 percent federal and 30 percent local.
Federal oversight. Commercial service airports in the AIPP must comply with Title 14 Code of Federal Regulations Part 139 and with TSA requirements for airport security.