Macquarie circles airport in Texas
May 08, 2008
David Nason, THE AUSTRALIAN, New York correspondent
THE Macquarie Group's airport ambitions
in the US have spread to Texas, where its infrastructure
division is in talks to lease all or part of the
Austin-Bergstrom International Airport in the Texas capital,
Macquarie spokesman confirmed yesterday that discussions
with Austin officials were under way but stressed they were at a
"very preliminary stage", with no formal proposal for an ABIA
takeover on the table.
According to some projections, leasing ABIA to a private
operator could earn the city of Austin $US500 million ($526
The airport play comes as
Macquarie and its
roads partner Centra await a decision on a proposed 75-year
lease for the Pennsylvania Turnpike, one of the US's busiest
At least three consortiums have submitted bids with
Pennsylvania Governor Ed Rendell, who is expected to select his
preferred operator sometime in the next week.
Mr Rendell wants to channel the lease payments -- possibly as
much as $US18 billion over the life of the lease -- into
Pennsylvania's ageing highways, bridges and mass transit
systems. But he is facing opposition from legislators, voters
and his own Turnpike Commission.
Opposition to airport privatisation in the US is also
expected to be strong, especially if foreign companies are
Under a Federal Aviation Administration pilot program
introduced in 1966, US airports can be exempted from federal
administration, but until now only Chicago's Midway Airport has
actively pursued privatisation.
The program allows for up to five US airports to be leased to
private operators, but the hurdles are many, including approval
from the FAA and from 65 per cent of airlines using the airport.
Macquarie, which already operates airports in Sydney, Tokyo,
Brussels, Copenhagen and Bristol in England, is one of six
companies to have lodged a proposal with Chicago officials.
It now sees a second opportunity in Austin, where the push
for privatisation is driven by federal laws that compel the city
to spend airport revenues at the airport while other
city-operated businesses such as Austin Energy and the Austin
Convention Centre return their profits to the city.
Austin city councillor Brewster McCracken told the Austin
Business Journal he was opposed to privatising public assets but
regarded the airport as a separate issue because it provided no
revenue to the city's general fund.
ABIA's total operating revenue for the 2007 fiscal year was
$US81.9 million with $US17 million of that going back into the
airport's capital fund.
Austin-Bergstrom is a former US Air Force Base 8km outside
Austin that was only opened to civilian traffic in 1999, to
replace a smaller airport. Last year, it serviced almost 8.9
million passengers, a record.
Macquarie Group has some $US200 billion
invested in infrastructure and it has targeted the US as its
major infrastructure growth area.
And for good reason. In a
report last week, the US Urban Land
Institute and Ernst & Young said US transportation
infrastructure investment was lagging far behind that of most
other developed nations and that greater acceptance of
public-private partnerships was the only practical answer.
It estimated the annual shortfall in funds for US transportation
needs at a staggering $US170 billion, a figure that would rise
sharply with the forecast population growth of 90 million over
the next 35 years.
report said vehicle miles travelled in the US had increased
95 per cent since 1980 while road capacity had increased only 3
It said 24 per cent of US roads were in poor to mediocre
condition and more than 25 per cent of bridges were structurally
or functionally deficient.
Cintra already jointly own and operate toll roads
in Illinois and Indiana.
Last month, electronic tolling started on the
Indiana Toll Road
with drivers using the automatic system getting their tolls
frozen at current rates until 2016.
A spokesman for the Indiana
Toll Road Concession Co, which
operates the toll road, said the spirit of the toll freeze was
to look after local users.
But in 2006,
Macquarie Infrastructure Group chief executive
Stephen Allen told investors in New York that the real advantage
of automatic tolling was that people tended to think tolls were
cheaper when they had an electronic tag.
"I call it the 'mobile phone effect'," Mr Allen said at the
time. "How many people out there know the cost of a call on your
mobile phone? Well, it's very expensive, I can assure you of
"It's the same thing with (electronic) tags. You go through, you
hear the beep, you don't think about it. You pay your bill once
a month. It's amazing how reaching into that pocket to get that
three bucks seems a lot more painful than hearing that beep."