Airport privatization is no magic bullet

Milwaukee County Executive Scott Walker has mismanaged the Milwaukee County Transit System (MCTS) by raising fares and cutting service!

Last year ridership plunged 9% to a 33 year low even as national transit ridership soared to a 50 year high in response to high gas prices and growing traffic congestion.

Walker doesn’t grasp rudimentary economics. You can attract riders/customers with low prices. Or you attract them by offering high level (quality) services. But no enterprise, public or private, can raise prices and slash service and operate successfully.

Yet, this has been Walker's failed strategy for the Milwaukee County Transit System.

From 2001- 2007, Walker increased adult cash fares by 30% from $1.35 to $1.75 and weekly pass fares by 52% from $10.50 to $16. He eliminated seventeen bus routes; reduced service on sixteen routes; ended year round downtown trolley service; and cut night time service.

This year he raised the adult fare again-to $2.00, one of the highest in the nation. And he cut four additional routes! Walker proposed cutting many more routes, but the County Board restored them.

Independent studies have warned that additional cuts of 35%, which would wipe out all Freeway Flyers and most night, weekend and suburban service, will be needed by 2010 without new state or local funding.

Walker's "starve the beast" strategy, designed to undermine the system by denying it operating revenue, has worked.

Now the County Executive wants us to trust him when he claims that he can save the MCTS by privatizing Mitchell Field. According to Walker, money really does grow on trees. We've just been too dumb to pick the low hanging fruit.

Before we buy Walker's promises of easy money, we ought to examine the experience of privatized airport operations. Despite the Milwaukee Journal Sentinel's recent editorial suggesting there is no experience to learn from, a google search reveals otherwise.

In 1997, Newnan airport in Coweta County, Georgia was privatized. Privatization advocates, like Walker today, promised it would attract to new business to the rapidly-developing county and generate between $25 and $50 million in new revenue within five years. Not quite Walker's optimistic $15 million a year, but pretty hefty numbers for a much smaller airport

So what happened?

Airport Technologies won the bid to manage the airport. But the money never materialized and the County terminated the contract.

Coweta County Administrator Theron Gay summarized the experience: "We felt like we could do the same things, but in a more cost-effective way. We decided it would work better to have the financials handled through the county, rather than pay a contractor to do it."

John Hickman, who initially supported the privatization effort, explained why privatization failed:"Privatization would just take away from the people what the people have funded with their taxpayer money. It just adds another hand in the till... Once "...the county took it back over and things improved tremendously."

Canada's airport privatization experiment also failed.

Don Young, the former transport minister and architect of Canadian airport and air navigation services privatization, told the Financial Times in 2004 in his first public statement on the government policy in six years : "It's pitiful what's gone on. I acknowledge that from my perspective that was a mistake."

Travellers are "being held up for ransom" by airports that have jacked up fees to pay for extravagant and unnecessary expansion projects.

"All too often the public has been convinced that through this magic bullet of development at an airport there's going to be huge economic benefit accrue to the community, and frankly what's happened is the traveller has been gouged by the way it is being handled...The problem was I believed the crap I was hearing from the private sector and chambers of commerce."

Latin America had similar problems. The Director of the International Air Transportation Association, Giovanni Bisignani, argues that the privatization of airports in Latin America has been a "failure," generating big profits for the terminal operators without spurring needed investment in infrastructure. "In many places (in Latin America), the fact of running an airport ... constitutes a license to print money," he said, contending that the way operators' concessions were set up has forced carriers "to pay at least $2.5 billion to the airports and service providers."

Privatization is not the magic bullet that Walker and his investment firm advisers allege.

Supervisor Marina Dimitrijevic points out in her op ed piece that Milwaukee County drank the privatization Kool Aid when it agreed to privatize the Museum. The promises of increased revenue were never realized and the County had to bail the Museum out. Privatizing child welfare has yielded equally unsatisfactory results and increased costs. There is no evidence to suggest that leasing the airport to a private firm for speculative promises will yield any better results.

Milwaukee's County Executive should remember that "There is no such thing as a free lunch."

Our community needs mass transit now more than ever. Rather than chasing the fools gold of privatization, we ought to figure out the most equitable way to pay for it.