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NEWS Last modified on January 17, 2017

FAA confirm receipt of application to privatise New York's Westchester County Airport

The FAA has received a preliminary application to privatise Westchester County Airport under the Airport Privatization Pilot Program, a move which could pave the way for Oaktree Capital to take over the running of the New York gateway.

The potential transaction involves an upfront payment of $111 million to New York’s Westchester County in exchange for a lease to operate and develop the airport over the next 40 years.

The deal stipulates that Oaktree will inject another $30 million in capital improvement projects in the first five years of the lease to ensure better facilities and an improved passenger experience.

It would also pay an annual revenue share to Westchester County over the full-term of the lease, which is expected to net it $15 million in the first year followed by $5 million over the next five years and then an average of $2 million over the remainder of the lease.

Westchester County executive, Robert Astorino, believes the deal will allow for the existing airport to be “redesigned to make it a better terminal to fly in and out of” and provide many more options for passengers.

He insists that a new terminal, casino and hotel are three projects that are not on the agenda for now and that Oaktree would need to gain special permission from the County to build them during the course of the lease.

LA-based Oaktree Capital owns Highstar Capital, the equity fund which formed Aerostar Airport Holdings with Mexican airport operator ASUR to win the concession to operate San Juan’s Luis Muñoz Marin International Airport.

Oaktree Infrastucture Fund managing director, Emmett McCann, says: “We believe that we can make improvements to the current airport operations.

"The commercial side of the house, for example, is currently in the bottom quartile for on-time performance. We also believe that the kerb to gate experience can be enhanced and there is some room for physical improvements such as making the holdroom better and improving food and beverage beyond retail.”

He also pointed out that Oaktree's goals were "not just about making pretty improvements to the terminal” as the company brings more capital that will help improve efficiency and the airport’s environmental performance.

The airport is currently served by five commercial airlines serving 16 destinations in the US and handleds around 1.5 million passengers, which is down from an all-time high of two million annual passengers in 2010.

Five of the carriers (JetBlue, American, United, Tradewind Aviation and Cape Air) are said to support the deal while Delta is still believed to be in discussions with Oaktree.

If County legislators and the FAA approve the deal, it could be pushed through by early summer.

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