Md. transportation chief opposes sale of BWI State open to other deals with Lockheed Corp.

May 09, 1992|By John H. Gormley Jr. | John H. Gormley Jr.,Staff Writer

Maryland Transportation Secretary O. James Lighthizer said yesterday that he opposes selling Baltimore-Washington International Airport in response to recent interest from the Lockheed Corp. in investing in the airport.

"We'd be very reluctant to sell the airport lock, stock and barrel," Mr. Lighthizer said. Selling the airport would be a "dumb strategic decision" because of the airport's role as an "economic engine" for the state, he said, adding, "I don't think the governor would let me do it."

While closing the door on an outright sale, Mr. Lighthizer said the state would be willing to consider other forms of privatization of the airport, as long as its key role as an agent of economic development was not compromised.

Lockheed's "objective is to make money. . . . My objective is to maximize that economic entity for the state of Maryland. The two are not exclusive objectives," he said.

In March, representatives of Lockheed Air Terminal, a subsidiary of Lockheed Corp., met with Gov. William Donald Schaefer, House Speaker R. Clayton Mitchell Jr., D-Kent, and Senate President Thomas V. Mike Miller Jr., D-Prince George's, to discuss the possibilities for privatizing BWI.

Although no formal proposition has been made to the state, Lockheed is still interested in some kind of role in the operation of BWI, said James Burnley, a Washington lawyer and former U.S. secretary of transportation in the Reagan administration who represents Lockheed.

Mr. Burnley said it is up to the state to decide what role private companies might play at the airport but that Lockheed has been looking for business opportunities at airports around the country.

"We'd like to be able to invest capital in U.S. facilities," he said. "It's going to happen. The question is: Where is it going to happen first?"

Lockheed would like to take over responsibility for an entire airport, he said. That could entail an outright sale or a long-term lease. But in either case, Lockheed would expect to have an investment stake in the development of that airport.

Under such an approach, Lockheed would invest funds it raised privately and would stand to profit from its business involvement. That private investment would free up scarce state funds for other projects. In addition, the state would benefit from taxes paid by the company on its profits.

Mr. Burnley said Lockheed's involvement would not jeopardize the ability of the state to use BWI as an economic-development tool.

"The state does not have to give up control," he said. Any deal could be set up to give the state oversight power to make sure the airport continued to fulfill its larger economic-development role for the state as well as generating profits for Lockheed. "That's an easy part of any such scenario," he said, even in an outright sale of the airport.

The proposed new international wing at BWI could be a prime candidate for privatization. The state is considering spending $100 million to $200 million to build such a wing in hopes of attracting more foreign carriers. International traffic has been the big area of growth at BWI in the past two years, a period during which domestic traffic declined.

Lockheed could, for example, build the international wing with private capital and assume responsibility for operating and marketing it.

Privatization is not a new concept at BWI. Much of the business activity there is already in private hands, including parking, food and aviation services to the airlines.

Under the Maryland Aviation Administration, the airport has done well financially. It posted an operating profit of $16.5 million in fiscal 1991 and is expected to end this fiscal year in June with a profit of $19.5 million.

Various forms of privatization offer the possibility of the state's realizing a substantial return on that investment.

"I think it's something that needs to be seriously investigated," said Robert Keller, president of the Greater Baltimore Committee. "The government ought to steer, not row," he said, paraphrasing the thesis from David Osborne and Ted Gaebler's recent book "Reinventing Government."

But he cautioned that any privatization needs to be closely examined to ensure that the public's interest in the airport is not hurt.

Donald P. Hutchinson, president of Maryland Economic Growth Associates, agrees that privatization of the airport should be investigated. But he advised against any outright sale or a deal that would mean loss of control by the state.

"My answer is that's not in our interest," he said. "It's a much broader issue than trying to make this a profit center."

Lockheed says the ball is now in the state's court in regard to what direction to take at BWI. Mr. Lighthizer said the state has hired an outside consultant to help the Aviation Administration develop a strategy to help BWI cope with the rapidly changing aviation industry. The privatization questions will have to wait several months for that study to be completed and analyzed, he said.

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