Privatization could reverse BWI's worrisome downward slide

Jim Burnley

May 27, 1993|By Jim Burnley

Because of an editing error in Jim Burnley's article in Wednesday's Other Voices, $36 million in estimated losses at Baltimore-Washington Instate Airport and Martin State Airport were said to cover this year only. They are estimated for this year and next. Other Voices regrets the error.

BALTIMORE-Washington International Airport has been much in the news of late. Some of the news has been positive, such as the story in March about plans for an airport face-lift. However, less positive developments have generated most of the coverage: the decision by KLM to abandon BWI and transfer its (( Amsterdam service to Dulles, the drop of more than 10 percent last year in the number of passengers using the airport and the controversy over the proposal to spend $120 million to build a new international terminal (opposed by all of the airlines still providing service to BWI).

To their credit, both Democratic and Republican leaders in the General Assembly have taken note of BWI's difficulties. Doubtless, their concern has been heightened by the analysis just completed by the Department of Fiscal Services, which reveals the combined operation and debt service of BWI and Martin State Airport resulted in a loss of more than $13 million in 1991 and '92, with estimated losses for this year projected at $36 million.

FOR THE RECORD - CORRECTION

BWI is the single most important economic asset in Maryland. If it languishes, it will seriously retard economic growth at a time when Maryland is already struggling to overcome the loss of thousands of defense-related jobs. Furthermore, the next three to four years present a perfect opportunity for BWI, if it is aggressively, efficiently managed, to attract airlines and passengers that will otherwise use Dulles or National airports.

Both of those airports are in the midst of massive renovation, which will continue to inconvenience travelers. BWI is already "user friendly." In light of the difficulties of using the other two regional airports, its passenger count should be increasing, not declining. International carriers should be moving to BWI from Dulles, not the other way around.

The bipartisan legislative leadership in Maryland has urged Gov. William Donald Schaefer to consider "privatization" as one solution to BWI's problems. While that term has a number of definitions, the leaders have recommended that the state invite proposals from qualified private companies to lease the airport. Such a lease would create a true public-private partnership, combining the policy responsibilities of the state with its role of landlord, while giving private management the day-to-day job of marketing and managing the airport.

Furthermore, a lease would generate income for the state, as compared to the millions it is losing now. New projects at BWI could be wholly or partially built with private capital, relieving some of the pressure on the state's bonding capacity. BWI would remain eligible for the same federal grants it now receives.

There is nothing radical about this sort of privatization. Leases and sales of airports are occurring all over the world. Recent examples include the new $550-million terminal in Toronto, built completely with private funds. The Canadian government is in the process of awarding the right to private companies to renovate and operate the two older Toronto terminals. Great Britain created a private company and then transferred its major airports to it five years ago. Mexico announced last year that it will privatize all of its airports.

In the U.S., private companies manage numerous airports, including those in Albany, N.Y., and Burbank, Calif. The federal government revised its policies last year to make privatization of airports easier. In another transportation field, the Clinton administration just launched a major initiative to encourage the development of high-speed rail through public-private

partnerships.

Earlier this spring, Governor Schaefer responded to these expressions of legislative interest by appointing a commission to study the idea. It is expected to report to him very soon. The commission has taken its assignment seriously, but it has had neither enough time nor the resources to solicit and analyze in detail concrete proposals by interested companies.

In fact, the primary task of the commission is to recommend to the governor whether the state should take the next step of requesting fully detailed informational proposals from companies. Only by taking that step can the state be assured it has sufficient facts to make an informed decision on whether it is in the best interest of the state and its people to form a public-private partnership.

Governor Schaefer's commission could recommend issuance by the state of a formal Request for Proposals or at least a Request for Information. Either could be issued without any commitment by the state to execute a lease if its officials are dissatisfied with the proposals submitted.

Some state officials have indicated that they want the commission to ignore the public-private partnership approach, urging instead that it recommend the creation of a state airport authority. In other words, simply moving BWI from one box to another on the state plan of organization is supposed to cure all its ills.

Such a cosmetic approach would make no significant difference in BWI's future. If BWI, and the people it is supposed to serve, are to prosper in intensively competitive international, national and regional markets, it must draw on the very best resources and skills available in both the public and private sectors.

Jim Burnley, a Washington lawyer, was U.S. secretary of transportation from 1987 to 1989. His clients include a company interested in airport privatization.

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