AOPA attacks plan to privatize New Orleans Lakefront Airport

<BR><SPAN class=twodeck>Plan leaves current users at mercy of for-profit operator</SPAN>

May 29, 2003

AOPA is opposing a proposal to privatize New Orleans Lakefront Airport because it would squeeze small general aviation and piston-engine users out of the picture for the sake of a profit.

The American Airports Corporation (AAC), a private, for-profit operator, wants to lease New Orleans Lakefront from the Orleans Levee District. It plans to transform it from New Orleans' primary general aviation reliever into an airport that caters to charters and corporate aircraft.

In formal comments filed with the FAA, AOPA said it opposes the AAC proposal on a number of grounds, including: it changes the role of the airport in ways that could have a significant negative impact on light GA aircraft owners and pilots; it contains no limits on fee increases that GA users of the airport and airport tenants may have to pay for rent or services; and it does not meet the intent of Congress when it created a pilot program for privatizing public airports.

"We have serious concerns," said AOPA President Phil Boyer, "not the least of which is, 'Who pays?' Not only will AAC have to make lease payments and forward an escalating percentage of their income to the Levy district, but as a business, they will also need to show a profit. That could lead to increased fees to based tenants and users of the airport."

Fundamental role of airport will change

An article in the April 2003 edition of Airport Business on American Airports Corporation's plans to privatize New Orleans Lakefront Airport makes clear that AAC intends to market New Orleans Lakefront to airline-class charter operations as an alternative to Louis Armstrong International Airport, New Orleans' main air carrier airport.

Such a change in overall airport operations would clearly have an impact on current users and tenants, according to AOPA's formal filing. For instance, the airport would have to significantly beef up security to meet Transportation Security Administration requirements. Security upgrades of that sort are extremely expensive.

The AAC proposal leaves a number of serious questions related to the shifting role unanswered. Who will pay for the upgrades? What will be the cost to current tenants and users? How will the shift in airport use affect land available for development of general aviation facilities?

AOPA believes the FAA needs to require guarantees that airport property will be developed for airport uses and facilities.

Inadequate safeguards against unreasonable fees

When Congress approved the measure that allows airport privatization, it included a provision that would allow air carriers to essentially veto excessive rate increases imposed by the airport operator.

"The statute requires that the percentage increase in fees imposed on general aviation aircraft at the airport will not exceed the percentage increase in fees imposed on air carriers at the airport," said AOPA Vice President of Regional Affairs Bill Dunn in the formal comments. "However, since New Orleans Lakefront does not have air carrier operations, these protections would be lost entirely."

AAC is committed to paying $300,000 a year plus an escalating percentage of the airport revenues to the airport's public sponsor, the Orleans Levee District, so that rent will necessarily be passed on to airport users in the form of fees and other payments. In addition, the privatization proposal states that all of the rent will go into the district's general fund, with none earmarked for specific airport purposes. Such "revenue diversion" is prohibited at other, non-privatized airports.

Proposal doesn't meet congressional intent

"It becomes obvious in reviewing congressional statements made during consideration of the law allowing privatization that Congress intended very specifically to authorize a pilot program that would provide a vehicle for private investment in airport development rather than continued draw against federal financing [original emphasis]," noted the AOPA comments.

But according to AAC's own five-year capital improvement plan, less than $1 million of an expected $32 million outlay will come from AAC, and more than $800,000 of that will come from airport revenue. That means that AAC plans to invest just over $96,000 in actual new, private capital over the course of five years. The remaining $31 million is expected to come from the FAA and the state of Louisiana.

"These points alone should be adequate reason for rejecting approval of the application," said AOPA in the comments.

FAA faces precedent-setting decision

"The impact of the FAA's decision in this matter will have far-reaching consequences and establish the model for future privatization proposals, AOPA's formal comments concluded. "Therefore, we respectfully request the Secretary deny approval of the proposal in its current form."

The nearly 400,000 members of AOPA make up the world's largest civil aviation organization. AOPA is committed to ensuring the continued viability, growth, and development of aviation and airports in the United States. These airports are a vital and critical component of a national transportation system.

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