Last week, Governor Garcia Padilla received his first protest, courtesy of his administration’s support for the public-private partnership (APP in its Spanish acronym) concerning the Island’s main airport, the Luis Muñoz Marin International Airport. The partnership, originally pushed by former Governor Luis Fortuño, and opposed, at the time, by Garcia-Padilla’s party in the run up to the elections, has been embraced by the current governor under the premise that the deal was already signed by the time he came into power. Garcia-Padilla doesn’t fully support the partnership, which would lease the main airport to Aerostar, a Mexican company who manages several airports around the world, for a period of 40 years.
In return, Puerto Rico would receive approximately 2.6 billion dollars over 40 years, with an initial payment of $615 million dollars and another $1.4 billion dollars in improvements to the airport. During the 2012 campaign, former Gov. Fortuño defended the partnership, alleging that the state did not have the resources to properly maintain the airport for the needs of the 21st century. Behind the scenes, it was well known that the agency responsible for administering the airport, the Puerto Rico Ports Authority, had a significant deficit that it hoped to plug with the money derived from the partnership. In an interview with El Nuevo Día, the Director of the Ports Authority admitted that his agency needs $500 million dollars immediately in order to pay off its debt.
Unions and student groups have opposed the partnership, alleging that it amounts to a privatization of an “essential cornerstone to our economy”. Opponents claim that the state can properly administer the airport, and that leasing the main airport for a period of 40 years will result in a net economic loss for the Island. Further, they claim that the deal would amount to a net loss of $887 million dollars to the Island. However, this figure was disputed by the Director of the Ports Authority Administration, stating that the figure cited by opponents does not take into consideration the debt owned by the airport, which actually places the airport in the red following debt payments.
Supporters, on the other hand, refer to successful implementations of this model in the United States, arguing that it will increase the airport’s efficiency and bring additional airlines and travelers to the Island. Gov. Garcia Padilla has refused to renegade on the partnership under the premise that it was too late by the time he came into power this past January. Opponents claim that the Governor should rescind the contract, regardless of the consequences. Notwithstanding the pressure, Gov. Garcia Padilla has stayed the course and will go through with the deal so long as the FAA approves it later this month.
As Puerto Rico struggles to recover its finances, Gov. Garcia Padilla is wise to continue a deal made by his predecesor as it would give the Ports Authority new life on its finances, while allowing the main airport to receive much needed improvements. The deal guarantees that the main airport remains in the black while delivering secure income to the Ports Authority. Further, by taking the government out of the equation, the Airport will have greater flexibility in its labor negotiations and contracts, allowing for greater competitiveness. Finally, if the privatization of Puerto Rico’s telephone company in the 90’s is any indication, private administration will result in a more efficient service for tourists and travelers alike.
The airport leasing deal is the latest model of the public-private partnership that former Governor Fortuño implemented, much to the opposition of the now ruling party, to which the latter has embraced now that it is in power. With it, Puerto Rico will continue to move away from a commanding public sector to a more thriving private sector.