Will Public-Private Partnerships Propel the Next Big Wave of Airport Improvements?

Mary Scott Nabers

The United States may boast the world's top economy, but that's not evident when travelers arrive at our front door. Sadly, U.S. airports do not impress international travelers. In fact, not a single one made the top 25 in Skytrax's 2016 survey of the world's best airports. It is shocking how far down the list you have to go to find a U.S. airport.

Operational inefficiencies, passenger congestion, limited retail, cumbersome access in and out of terminals and the overall negative passenger experience found in too many U.S. airports is the result of outdated design, increasingly high demand, a lack of funding investment and a tendency to reject the concept of collaborating with private-sector experts. That, however, is changing. 

Big improvements are occurring, and more are expected soon. In fact, modernization projects at U.S. airports are expected to outpace efforts at all other countries across the globe in the next few years.

Los Angeles International Airport (LAX), for instance, has launched a $14 billion modernization project. More gates are available to service the massive Airbus A380 jets, retail ranges from Armani

Mary Scott Nabers 
Mary Scott Nabers is president and chief executive officer of Strategic Partnerships, a business development company specializing in government contracting and procurement consulting throughout the United States.

and Porsche to KFC and passengers are treated to all types of new amenities at the Tom Bradley International Terminal. An automated people mover train will allow travelers quick access to terminals, a consolidated car rental center and parking garages. 

New York's LaGuardia Airport has allocated $4 billion in funding to bring it facilities up to "first-world standards." John F. Kennedy International Airport (JFK) will also be renovated. 

In the Midwest, Chicago's O'Hare Airport (ORD) has completed $4.26 billion of improvements in an airfield modernization program that is expected to total $5.5 billion. Last year, the Chicago Department of Aviation, airlines and FAA reached a $1.3 billion funding agreement to build a new runway, centralized deicing pads and other critical airfield infrastructure at ORD. The $1.3 billion initiative is intended to pave the way for subsequent improvements that will allow the airport to add more gates and modernize its terminals. 

Major changes are coming to U.S. airports-but none too soon.

The improvement trend will reach smaller U.S. cities as well. The city of Houston has announced a major modernization project at George Bush International Airport, and San Antonio officials are hoping to do the same with their airport. 

In Ohio, John Glenn International (previously known as Port Columbus International) finished an $80 million terminal modernization last year, and is currently designing a new consolidated rental car facility at a preliminary estimated cost of $150 million. Longer term, the airport is planning for a new terminal complex that is expected to cost more than $1 billion.

It will be interesting to see which cities follow a trend that has proved successful in other countries: the privatization of airport terminals and overall operations. Many cities have seen the success of collaborating with airport experts in other countries and have consequently engaged in public-private partnerships, also known as P3s or PPPs. Most airports using this method build a repayment revenue plan around the increased revenue that is generated inside the modernized terminals.

This year alone, Hartsfield-Jackson Atlanta International plans to spend $500 million on capital improvements-part of a 20-year $6 billion modernization effort known as ATLNext. In preparation for the 2017 portion, the airport is hosting an "industry day" in March to brief private-sector businesses about a variety of opportunities: central passenger terminal modernization, cargo expansion site preparation, facility maintenance, parking structures, a new hotel and travel plaza. Previous industry days for other projects have apparently yielded positive results. 

Major U.S. airports are clearly in "catch-up" mode, and that process should move rapidly throughout the country to include smaller airports as well.  Because of the widespread modernization projects, airport contractors and operators throughout the world now have a laser focus on what is happening at airports in U.S. cities. The amount of improvement they see and how it gets done is up to you and your governing officials.

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