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Con: Lambert Airport Privatization

March 19, 2018

Art+by+Stella+Monshausen.

Art by Stella Monshausen.

St. Louis is currently in the process of deciding whether or not to privatize St. Louis Lambert International Airport.

This idea was first suggested by previous Mayor Francis Slay and is now being continuously investigated and advocated by current Mayor Lyda Krewson. This push is primarily motivated by the belief that the airport has continued to struggle since its loss of hub status for TWA and American Airlines in 2003.

However, since then, the facts have shown the opposite.

In fact, in recent years, Lambert has been gaining stability. In November of 2017, Fitch Ratings affirmed its upgraded rating of Lambert’s $325 million airport revenue bonds. Fitch cited the airport’s stable financial status, saying Lambert shows “continued emplacement growth in conjunction with a renewed airline agreement providing full recovery terms (which) will allow Lambert to maintain stable debt service coverage ratios.”

The upgraded rating represents that the airport is doing for St. Louis what it should do: providing a steadily increasing stream of revenue for the city.

Lambert Airport, according to their ratings, is financially stable and facing very little in the way of competition from other airports. Thus, if left alone, all the current data on Lambert shows that the future should mirror the continued improvement of recent years. In 2016 alone, the number of passengers traveling through Lambert increased by 10 percent.

In fact, December 2016 marked the airport’s 28th consecutive month of passenger growth. Finally, in fiscal 2017, Air Cargo increased over 6 percent.

This data begs the question: why fix what is not broken?

The benefit of privatization is said to be hundreds of thousands of dollars that could be brought into the city. However, this benefit has not been presented to the city in any sort of quantifiable way.

When the airport currently has so much evidence that its current system is functioning better than ever, any suggested “improvements” to its structure must be brought to the table only with explicit long term plans that show benefit for the city.

As of now, no such plan exists.

In a city that is desperate for more cash flow, the offer of privatization is a tempting one, but with any offer such as this one comes risk.

There is unnecessary risk involved in the city relinquishing some of its power to a for-profit private entity whose actions are influenced very little by public interest.

Privatization can work well when it is incorporated into a competitive industry in which competition will naturally discipline managerial behavior; however, there is little to no competition among airports.

So why take a size-able risk for only the chance to improve a city asset that is already stable and making gains on its own?

Privatization of Lambert Airport would mean selling the airport to the highest bidder without limitations or competitive motivators to regulate how the money brought in was spent. The issue is less the overarching value of privatization, but in which cases the conditions are such that privatization will set up business owners to be inclined to act in the public’s interest. In the case of Lambert Airport, the lack of competition makes this inclination exceedingly unlikely.

Historically, privatization has been beneficial for cities on a very short term basis.

The initial boost in revenue from the sale gives the city a temporary surplus of cash to work with, but this potential temporary gain is not nearly enough to overthrow the current evidence of long term growth if the airport remains public.

Objectively, the case for privatization lacks enough quantifiable evidence to make it the smart choice for the city. As of now, privatization is only the riskiest choice for a city in need of stability.

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About the Contributor
Mariclare Gatter, Page Editor

Mariclare Gatter is a senior at CHS who has been on the Globe staff since freshmen year.  Mariclare is proud to be a Globie because she loves being a part of the tight-knit...

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