Midway gets leased, what happens to controllers?


Well-Known Member
Midway Airport would become the nation’s first privately-run major commercial airport and stay that way for 99 years, under a blockbuster $2.5 billion deal announced Tuesday that will create a windfall to shore up city pensions and rebuild Chicago’s aging infrastructure.
Struggling to close a $420 million budget gap that will force 1,000 layoffs, Mayor Daley pulled another rabbit out of the hat by selling off a third, and by the far the biggest, city asset — in spite of the credit crunch.
"Everybody thought … the deal was dead a month ago. There were rumors running around City Hall and every place. You heard it: ‘The deal is dead. Nothing’s gonna happen,’" a triumphant Daley said.
"We’re on the cutting edge. If you’re not creative in an economic crisis for your city, where are you gonna get the infrastructure money to compete? How are you gonna pay for all these things? We’re very fortunate. No other city is doing this."
If the FAA and the City Council approve, Midway Investment and Development Company LLC will take over the Southwest Side’s landlocked airport-in-a-neighborhood that came back from the dead after the demise of Midway Airlines.
MIDCo is a consortium comprised of: New York’s Citi Infrastructure Investors; YVR Airport Services Limited of Vancouver and Boston-based John Hancock Life Insurance. YVR owns and operates 18 airports on three continents. It is jointly owned by Citi Infrastructure Investors and by the Vancouver Airport Authority, which operates Vancouver International Airport.
Roughly $1.3 billion of the proceeds will be used to pay off Midway Airport debt. State law requires 90 percent of the $1 billion profit to be used to bankroll city infrastructure projects and shore up under-funded city employee pension funds.
That leaves $100 million to be spent at the mayor’s discretion. But, he’s not about to use it on payroll.
"So you use the $100 million [to avert layoffs]. What do you do after that? That’s it. You’ll have nothing next year? It’s a four-year cycle you’re in. It’s not one year. ... Okay, I’ll protect you for two months, three months. But, I can’t protect you for three years. That’s your problem," Daley said.
In exchange for the massive up-front fee that falls short of the $3 billion some analysts expected for Midway, MIDCo will pocket airport revenues that topped $130 million in 2006, including parking, concessions, and passenger facility charges.
That means heavy motivation to squeeze more revenue out of Midway by making greater use of Midway’s 43 gates, creating more concession space, charging higher prices for food and retail items and increasing parking fees.
Parking rates at 1,400 of Midway’s 11,500 spaces will be capped at the rate of inflation for the life of the lease. For the remainder of spaces, the sky’s the limit.
John Schmidt, the former Daley chief of staff now serving as counsel to the city on the Midway deal, has already been paid $1.7 million in legal fees and stands to get $1.5 million more when the airport deal closes.
Schmidt predicted that air travelers would see more bars and restaurants, higher quality retail and a greater range of shopping choices.
"The Vancouver airport has retail the quality of a shopping mall. It has a spa and a four-star hotel. We won’t have the view of Vancouver. But, the quality of retail operations should see a noticeable change," Schmidt said.
"The range and diversity of restaurants will change. There’ll be more bars. It’s ridiculous that, if you get stuck at a gate, people line up to get a drink at a bar. If that were happening on Rush St., there’d be another bartender the next night."
And what about the prices?
"You don’t make money by charging higher prices. You make money by offering people more opportunity. People may drink more. But I don’t think they’ll pay more for their drinks," Schmidt said.
Chief Financial Officer Paul Volpe said "Our experience shows that private operators work very hard to drive traffic through the airport. That’s really the greatest benefit for them. And they do that by really providing the goods and services people want at fair prices."
Currently, Midway has 43,000 square feet. of concessions, including 12 restaurants and nine retail stores. The airport’s five runways handled 304,000 aircraft operations in 2007.
Buoyed by the $2.4 billion gravy train of revenue generated by privatizing the Chicago Skyway and downtown parking garages, Daley has moved to unload city assets at a record pace.
The mayor flatly denied that he’s mortgaging Chicago’s future in exchange for windfall profits today.
"That means if your streets are crumbling today and your sewers are crumbling and everything else is crumbling, the city is gonna be alright. This city will not be a city if everything crumbles," Daley said.
After bankrolling the $927 million reconstruction of Midway, airlines initially demanded a share of the profits generated by a long-term lease. The carriers also questioned whether a private operator could turn a profit -- and lower airline rents and landing fees -- without cutting back on maintenance and emergency services.
They dropped their reservations, after the city agreed to freeze "total airline fees" for the first six years and increase them by the rate of inflation after that. The agreement would run for 25 years, followed by five-year renewal periods.
In 2006, Gov. Blagojevich signed off on a Daley-backed bill that made Midway privatization possible.
It guarantees property tax exemptions to private investors who lease Midway, provided runways are not expanded beyond the airport’s current boundaries and that the airport’s 190 employees are offered "substantially similar" jobs at comparable pay. MIDCo will also be bound by the city’s minority business requirements.
The neighborhood around Midway has been sensitive about possible expansion since the fatal crash of a Southwest Airlines jet that overran a snowy runway and crashed into traffic, killing an Indiana boy


New Member
So I read this morning that Midway Airport will has become leased for 99 years, becoming the first privately run major airport. What does this mean for controllers working there? Do they still work for the FAA?
They worked for the FAA when the city ran the airport. Why would that change?


Well-Known Member
I don't know... Just curious if it becomes a contract tower or not.
No, that's up to the FAA if it is currently an FAA tower.

Some control towers, such as the one at my county airport, have always been contract towers. One of the airports in the middle of the state recently built a control tower that is run by students of a nearby technical college working on their CTOs. On the other hand, the tower at the airport I've been flying out of lately is a contract operation, even though the FAA sign still sits out in front of it.


New Member
A MDW controller I talked to a few days ago told me tensions are high, since it is very likely the tower will be contracted out.