$2.5 billion plan to Privatize Midway Airport

Tribune:

The private consortium that would take over includes Midway Investment and Development Co. LLC, Citi Infrastructure Investors, John Hancock Life Insurance Co. and YVR Airport Services Ltd., Daley said at a news conference.

The lease term would be 99 years, and, under state law, the city must use 90 percent of the lease's net proceeds for infrastructure projects around the city, Daley said.

Here's more from Crain's:

The deal will net the city more than $1 billion, the mayor said, after paying off the airport’s debt.

The bid came in at the low end of initial estimates by market observers when the city first reached an agreement with Midway’s airlines on the terms of a privatization deal.

But given the current turbulence in the financial markets and a recent downturn in Midway traffic, landing a deal of this size has to be considered a “homerun for the city,” says privatization expert Robert Poole.

Even more from the Sun-Times:

In exchange for the massive up-front fee that dwarfs the $1.8 billion Chicago Skyway windfall, the private operator will pocket airport revenues that topped $130 million in 2006, including parking, concessions, and passenger facility charges.

That means heavy motivation to squeeze more revenue out of Midway by making greater use of Midway’s 43 gates, creating more concession space, charging higher prices for food and retail items and increasing parking fees.

“Our experience shows that private operators work very hard to drive traffic through the airport. That’s really the greatest benefit for them. And they do that by really providing the goods and services people want at fair prices. So, that’s what we believe we’ll see,” said Chief Financial Officer Paul Volpe.

Currently, Midway has 13,500 parking spaces and 43,000 square feet of concessions, including 12 restaurants and nine retail stores. The airport’s five runways handled 304,000 aircraft operations in 2007.

Buoyed by the $2.4 billion gravy train of revenue generated by privatizing the Chicago Skyway and downtown parking garages, Daley has moved to unload city assets at a record pace.

One final detail that you will see in all of these articles on this same subject...

If the FAA and the City Council approve, Midway Investment and Development Company LLC will take over the landlocked airport-in-a-neighborhood that came back from the dead after the demise of Midway Airlines.

What do you think about this?