Airport Privatization

.. ant to have to worry about cleaning up anything that might be unearthed later. Problems with reuse As construction began, planners soon discovered that although the city was saving time and money by reusing Bergstrom, there were drawbacks. One example came the day after the Air Force vacated the base. All across Bergstrom, residents and employees had turned off the water when they left.

The resulting water pressure was more than the old system of pipes could handle. The city field staff ran around for months chasing water leaks. The city soon discovered that much of the base’s utility system could not be reused, resulting in one of the first increases in the airport budget. Utilities the city had thought would cost $6.7 million to refurbish ended up costing $24.5 million, in part because many new pipes and lines had to be installed. City planners also learned they couldn’t save or reuse as many buildings as they had planned. Bulldozers demolished 20 percent of the housing as well as an almost-new commissary and a 36-bed clinic, in addition to the buildings designers never planned to save.

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Some of the buildings were too old, not up to code and contained lead paint and asbestos. Others would have cost too much to relocate, city officials said. What actually happened to the buildings Of the 322 buildings, not counting 719 houses or duplexes, about 70 remain. Some house the Texas National Guard. City offices are in others. The most recognized of Bergstrom’s old buildings, the 12th Air Force division headquarters known as ”The Donut” because of its unusual design, is being remodeled and will become a Hilton hotel in the spring of 2000.

One of the largest hangars is being used as a private aircraft maintenance area, and the aircraft painting facility still stands. Noise Pollution Many of the residents near the new Bergstrom do not have late-afternoon barbecues in their backyards anymore. They have gotten tired of trying to yell over the roar of cargo planes on their approach to Austin-Bergstrom International Airport. Nearby area residents will most definitely be affected by a noise problem that is likely to get worse as air traffic increases in the Austin area. As a result, the city is doing a new noise study to determine just what impact the $690 million airport in Southeast Austin will have on residents nearby and under the flight path. They’re also trying to figure out just how to help residents and business owners who will be affected by the noise.

Soundproofing and property purchases are options that now must be considered under this study to assist residents in coping with this result of progress. Residents already in the cargo flight path say the planes have disrupted neighborhoods that had enjoyed a brief respite from the noise after Bergstrom Air Force Base closed in 1993. Cargo planes tend to be noisier than passenger airplanes, and by the end of 1999, federal rules will require that older planes be replaced or retrofitted with engines that are quieter and less disruptive. The noise study will take that into account, as well as increased flights and expanded service. The city has placed five noise monitors around the airport to gauge how loud the planes are on some approaches. Although the prospect of airport noise is frustrating for many in the Austin-Bergstrom area, fewer residents will be affected by noise than the 30,000 people who live around Robert Mueller Municipal Airport or under the flight paths will. Increase in costs per passenger for landing fees The cost per passenger for airlines to operate in Austin will be higher than at some other Texas airports.

At San Antonio, the airlines pay $3.45. At Dallas-Fort Worth it’s $2.84, and at Hobby in Houston it’s $4.79. This makes Austin-Bergstrom one of Texas more expensive airports for airlines to operate out of though the cost is still less than other new airports. At Denver International Airport, the cost per passenger is $15.58. In Pittsburgh, where a new terminal was built in the early 1990s, it’s $7.94. With the airlines flying in and out of Austin-Bergstrom International Airport in 1999, their costs per passenger for landing fees and rental rates will almost double from about $3.90 per passenger at Mueller to $7.30 per passenger at Austin-Bergstrom.

Each airline that flies in and out of Austin-Bergstrom will determine how to deal with the cost increases — either by raising fares or by cutting costs elsewhere. What the airlines pay in rentals and landing fees is only about 5 percent of their total operating cost. For most airlines an increase in those costs in a city the size of Austin will not require raising fares. New construction is always expensive but most of the airlines will not pass this cost directly onto customers. Since the inception of actually privatizing Bergstrom for the new airport and after years of haggling, the city and the airlines that serve Austin signed off on an agreement assuring that when the airport opened there would be planes flying in and out of it.

The city charges the airlines for everything from landing fees and leases for airplane parking to counter space and waiting rooms inside the terminal. Because the city is paying part of its $585.1 million share of the $690 million airport with revenue bonds, the rates have to be enough to pay back the debt. In most cases, it is deemed best to get the airlines on board for a new airport during the planning phase. But the airlines withheld support for a new airport, criticizing the size and cost. In particular, some of the airlines were concerned about the five-gate terminal expansion added by the city midway through construction. The airlines were unsure that 25 gates were needed. There are 16 gates at Robert Mueller Municipal Airport, but in the end the airlines ended up asking to have use of 21 of the gates.

While the city does not have an official business agreement with the airlines, the fact that they committed to an agreement made it unlikely the airlines would balk at moving. The alternative would have been to pull out of the growing Austin market. In recent years, passenger traffic at Mueller has increased between 5 percent and 8 percent a year. The airlines weren’t thinking of backing out. Those on both sides, the city of Austin negotiatiors and airline industry management, say a turning point in the negotiations came when the airlines agreed to the city’s plan to use the sale of Mueller municipal airport for city coffers instead of just retiring airport debt.

In exchange, the airlines would get reduced fees at Austin-Bergstrom. About $2 million was trimmed from the operations budget at the airport. Assessment A study of the direct economic impact of the new airport has not been done, but by 2012 there are expected to be more than 16,000 new jobs associated with the airport and more than 725,000 square feet of new development drawn to the surrounding area. Federal and local authorities know of no larger conversion of a military base to a civilian airport in recent history. By transforming Bergstrom from a proud military base to the $690 million Austin-Bergstrom, the City of Austin saved $200 million in land and runway costs.

Aviation industry officials are paying attention to what has happened in Austin. As more base closures happen and all levels of governmental agencies seek to outsource, industry experts, of all categories, look with interest at how Austin was able to cut costs by re-using an existing site. And the innovation of the environmental initiatives the city took during construction, such as an aggressive recycling program and building with energy-saving materials. Austin’s reuse and environmental initiatives were honored by the Airports Council and the Federal Aviation Administration. As such, I would say that the year 2012 will be looked upon with great interest in foretelling whether the actualization of Austin-Bergstrom is as much as a success in the practical as well as it appears to be in the theory. Bibliography American Statesman, (1999). Airbase to Airport: A model transition [Online]. Available: URL: ecycle.html [1999, January 31]., (1998). Airports neighbors hear citys noisy plans. [Online]. Available: URL: oise.html [1998, October 15]. National Center for Policy Analysis, (1999). Privatization trends. [Online].

Available: URL: .html [1999]. United States General Accounting Office, GAO/NSIAD-96-149 – Report to the Chairman, Subcommittee on National Security, International Affairs, and Criminal Justice, Committee on Government Reform and Oversight, House of Representatives, (1996). August 1996 MILITARY BASES – UPDATE ON THE STATUS OF BASES CLOSED IN 1988, 1991, AND 1993. [Online]. Available: URL: [1996, August].

SFA Gazette, (1999). Military Base Development [Online]. Available: URL: