Whatever Happens, Private Airport Is Matter of Public Trust

How do you think Orange Countians would answer this question: Do you support a multibillion-dollar expansion of the size and scope of our county government?

Without a doubt, the response would be overwhelmingly negative. Yet in all the debate about the future use of 4,700 acres in the heart of Orange County, the all-important question of government versus private ownership has been overlooked.

David Hinson, the former FAA administrator, estimates the market value of the El Toro Marine Corps Air Station as an airport at $10 billion. Even discounting this substantially, there’s no question that an airport with revenue and employees somewhere in excess of the current John Wayne Airport, but less than LAX, would be a considerable addition to the size, power and bureaucracy of county government.

Measure A, the 1994 ballot initiative, does not mandate a government-owned airport. In fact, it specifically contemplates an airport at El Toro that is “privately owned and operated.” Whether or not El Toro becomes an airport, selling the property is the wisest course for taxpayers, for business, and for the health of our county economy.

For starters, selling El Toro will put valuable real property on the tax rolls, yielding a perpetual annuity to local schools, transportation, water quality and social services. In addition, while airports built with public money are precluded from using airport revenues to benefit local communities, this restriction wouldn’t apply if the El Toro property were sold.

Even more important, selling El Toro will protect us from the cost overruns, politicized business decisions, and misreading of the market that consistently plague government-run industries.

Denver International Airport (DIA) is the only major domestic airport built in the United States in the past 20 years. Government-owned and managed, it illustrates how not to proceed. The Denver airport cost $3.6 billion more than local officials budgeted. It opened 16 months behind schedule, after the cancellation of four previous “grand openings.” Its debt securities were classified as high-risk “junk” bonds.

To recover these huge cost overruns, Denver officials charged higher landing fees. As a result, airlines and consumers now pay an average 20% to 38% surcharge, and the per-passenger cost is three times higher than before. Passengers have switched to Colorado Springs, 80 miles away, where passenger levels have doubled to 4.8 million annually. Denver lost one of its two major hub airlines, killing thousands of local jobs.

The Denver fiasco is one reason that while no other government-owned airport has been built in America during the last 20 years, more than 50 countries now have experience with private airports.

In 1987, Prime Minister Margaret Thatcher led the sale to private owners of seven British airports, including all three in London. Today, Heathrow, Gatwick and the rest of the United Kingdom’s private airports are thriving and profitable.

The rest of Europe is following suit: Copenhagen and Vienna are now privatized. Germany is selling Dusseldorf’s airport, with Hamburg and Berlin to follow soon. Portugal is moving to private airports in the near future; and in Athens, private partners are major players in the city’s new airport.

The Australian government is now privatizing three of the country’s four largest airports-Brisbane, Melbourne and Perth. This is already so successful, raising $2.6 billion for local taxpayers, that Australia will convert an additional 15 airports to private management this year.

In Latin America, 10 airports have already been privatized, including the airport in Santiago, Chile, the three main airports in Bolivia, and two large airports at Buenos Aires--with 31 provincial airports throughout Argentina soon to follow.

In Illinois, state officials are mounting what the Chicago Tribune calls “an all-out marketing campaign” for private investment to build a $2.7-billion airport on 23,000 acres outside Chicago.

Why not Orange County? Private financing of our toll roads has speeded up construction and saved taxpayers billions. And while selling El Toro means that partisans will no longer be able to make unverified economic claims, isn’t it wiser to face market realities before we put taxpayers at risk?

It’s time we consulted the market. If the Pentagon sells the property, Orange County will gain perpetual tax revenue and the efficiencies of free enterprise. If the Pentagon chooses to forgo the money from a private sale, then Orange County should pocket the tax revenue and the sales proceeds.

Our county congressional delegation will see to any necessary details in federal law. In 1997, Reps. Ed Royce, Dana Rohrabacher, Ron Packard and I wrote to Jan Mittermeier, the county’s chief executive officer. We said that “notwithstanding our various views on an airport,” we unanimously supported “a private sale of El Toro.” Memo to Jan: call Coldwell Banker.