City of Chicago proposes 50-year lease of Midway airport just as ATA pulls out for good
Chicago's second airport - close-in, low-fares hub Midway - is on the block to become the first major US airport transferred to private management under a lease proposal made by the city. Chicago's administration thinks it can raise up to $3 billion through the leaseback, which would be for 50 years or more.
The airlines at Midway, chiefly Southwest Airlines, have given tentative agreement to the plan, but they will be one fewer in number by June. That is when ATA Airlines pulls out of the airport that it helped make synonymous with low fares. ATA, formerly known as America Trans Air, has served Midway since 1992. For several years ATA operated a hub at Midway with both mainline flights and turboprop feeder flights operated by its subsidiary Chicago Express. But ATA has gradually reduced services there since filing for bankruptcy protection in late 2004 and selling Chicago Express in 2005.
ATA, which emerged from bankruptcy in late 2005 with Southwest as a new codeshare partner, will end its domestic flights at Midway in April. Its two international routes at Midway, to Cancun and Guadalajara, will end in early June. That will leave ATA only with scheduled service to Hawaii. ATA operates 12 aircraft between Hawaii and four cities on the west coast. The rest of its 30 aircraft fleet will be dedicated to charters.
Southwest is the dominant carrier at Midway and over the last few years has steadily grown its operation there. AirTran also has been steadily expanding its Midway services since its failed bid to take over ATA's Midway operation during ATA's bankruptcy.
Chicago officials say the airport has established itself as a desirable low-fare hub. Preliminary offers to lease the airport are due at the end of March.
Other US airport privatisation efforts have had a mixed track record. The one done deal, that of Stewart airport in New York, lasted only a year after a 99-year lease was awarded to the UK-based National Express Group. National Express last year transferred the lease to the Port Authority of New York and New Jersey. San Diego, Niagara Falls in New York and Aguidilla in Puerto Rico have contemplated privatisation in recent years but in the end decided to withdraw their applications to the FAA. A plan by New Orleans, however, is still pending.
Source: Airline Business
