Annual Surface Transportation Infrastructure Report 2025

Annual Transportation Finance Report 2025

The post Annual Privatization Report 2025 appeared first on Reason Foundation.

Worldwide over the past three decades, governments have turned to the private sector to design, build, finance, operate, and maintain infrastructure, including electric, gas, and water utilities; airports, seaports, and toll roads; and pipelines and telecommunications providers. In many cases, existing infrastructure entities needing reconstruction or modernization were “privatized” via either outright sale or long-term leases.

For new infrastructure, governments awarded long-term design-build-finance-operate-maintain (DBFOM) concessions via a competitive process. These long-term public-private partnerships had terms typically between 30 and 50 years.

The sale or lease of an existing facility is referred to as a “brownfield” transaction, while a public-private partnership to develop and operate a new facility is a “greenfield” transaction.

While the United States still lags behind many countries in Europe, Asia/Pacific, and Latin America/Caribbean, this difference arises in part because, in the United States, much infrastructure that was state-owned and operated in Europe and other regions was historically investor-owned in the U.S.—such as telecommunications, electric and gas utilities, pipelines, and a fraction of water and wastewater utilities.

On the other hand, major transportation infrastructure such as airports, seaports, and toll roads that have been widely privatized in Europe, Asia/Pacific, and Latin America/Caribbean countries are still mostly government-owned and operated in the United States.

Both brownfield and greenfield infrastructure projects require long-term financing. Facilities owned and operated by governments are often financed 100% by government revenue bonds or general-obligation bonds, which in the United States are exempt from federal taxation. When the private sector invests in infrastructure, it typically invests equity to cover part of the cost and finances the rest via long-term revenue bonds. To level the financial playing field for U.S. public-private partnerships, Congress provided for tax-exempt private activity bonds (PABs), which are now widely used for such projects.

The large financing needs for privately financed infrastructure have led to the development and growth of infrastructure investment funds, which raise equity to be invested in privately owned or P3 infrastructure.

Public-sector pension funds, seeking to increase the overall return on their investments, are also making significant equity investments in revenue-generating infrastructure.

Likewise, insurance companies and sovereign wealth funds are now making long-term investments in this kind of revenue-generating infrastructure.

This report reviews 2023 developments in public-private partnerships and private infrastructure investment, focusing on transportation infrastructure. While the report’s scope is global, it pays particular attention to U.S. developments in P3 infrastructure and the continued growth in pension fund investment in this field.

Part 2 reviews the continuing growth of infrastructure investment funds worldwide.

Part 3 provides an update on the largest companies and major P3 projects under way globally and in the United States.

Part 4 reviews pension funds’ increasing investment in revenue-generating infrastructure projects.

Annual Privatization Report 2024 — Transportation Finance

The post Annual Privatization Report 2024 — Transportation Finance appeared first on Reason Foundation.

In the second half of the 20th century, the world’s airports and air traffic control systems were essentially all departments of governments. Two events in 1987 launched an ongoing wave of organizational and government reforms: The privatization of the British Airports Authority and the corporatization of the New Zealand government’s air traffic control functions as Airways New Zealand.

British Airports Authority (BAA) was privatized as a single entity comprising the three major London airports plus several other airports in the United Kingdom. Later government policy decisions led to selling Gatwick, Stansted, and two Scottish airports to new private owners.

The improved performance of the privatized airports inspired a global wave of airport privatization and long-term public-private partnerships (P3s) that has resulted in over 100 large and medium-sized airports being either sold to investors or long-term leased as revenue-based P3s—in Europe, Asia, Latin America, and elsewhere.

The outlier has been the United States, which has only two P3-leased airports (San Juan International and Tweed New Haven) and a small number of public-private partnership arrangements for airport terminals and other individual facilities.

The corporatization of Airways New Zealand in 1987 also led to a global trend under which more than 60 countries subsequently separated their ATC systems from the government’s transport ministry and set them up as self-supporting corporations, regulated for safety at arm’s length from the government. Within the first decade of this trend, the leading air traffic control providers organized a trade association called the Civil Air Navigation Services Organization (CANSO). Today CANSO has 93 full members (providers of ATC services) and 91 associate members (mostly supplier companies). CANSO is the air traffic control counterpart of the global organizations for airlines (International Air Transport Association) and airports (Airports Council International).

This brief reviews developments in the United States and worldwide regarding private-sector participation in airports and air traffic control.

While the United States remains an outlier when it comes to airport and air traffic control organization and governance, interest in airport privatization via long-term public-private partnership leases continues.

Read the full report here:

The post Annual Privatization Report 2024 — Aviation appeared first on Reason Foundation.

Governments have used long-term public-private partnerships for surface transportation projects for the past 60 years.

As documented by José A. Gómez-Ibáñez and John Meyer, the phenomenon began in the 1950s and 1960s, as France and Spain emulated the model pioneered by Italy prior to World War II.

Italy’s national motorway systems were developed largely by investor-owned or state-owned companies operating under long-term franchises (called concessions in Europe). In exchange for the right to build, operate, and maintain the highway for a period ranging from 30 to 70 years, the company could raise the capital needed to build it (typically a mix of debt and equity).

The model spread to Australia and parts of Asia in the 1980s and 1990s, and to Latin America in the 1990s and 2000s.

Nearly all the projects in those regions from the 1950s to 1980s were financed based on the projected toll revenues to be generated once the highway was in operation. Some projects went bankrupt as a consequence of reduced traffic and revenues during severe economic downturns (e.g., the oil price shock of 1974), leading to the nationalization of some companies.

In the late 1990s and early 2000s, however, the governments of France, Italy, Portugal, and Spain all privatized their state-owned toll road companies and formalized the toll concession public-private partnership model.

Australia has allowed several concession company entities to go through liquidation, with the assets (in each case major highway tunnels) being acquired by new operators at a large discount from the initial construction cost.

Other governments in Europe adopted a different form of highway concession. Generally, not favoring the use of tolls, they created the concept of availability payments as a means of financing long-term concession projects. In this structure, the company or consortium selected via a competitive process negotiates a stream of annual payments from the government sufficient (the company expects) to cover the capital and operating costs of the project and make a reasonable profit.

The capital markets generally find such a concession agreement compatible with financing the project, via a mix of debt and equity. Since no toll revenues are involved, this model applies to a much broader array of transport and facility projects, including rail transit. In the highway sector, nearly all long-term concession public-private partnership projects in Canada, Germany, the United Kingdom, and a number of Central and Eastern European countries have been procured and financed as availability payment (AP) concessions.

In a small but growing number of cases—major bridges, as well as highway reconstruction that includes added express toll lanes, for example—governments collect the toll revenues and use the money to help meet their availability payment obligations. These cases are called “hybrid concessions” in this report.

Of the top 10 worldwide surface transportation public-private partnerships that reached financial close in 2023, seven used availability payments, continuing what had been a growing trend over the last seven years.

In 2022, five of the top 10 public-private partnerships used availability payments.

The growing use of availability payment concessions has enabled P3s for projects that do not generate their own revenues, as well as hybrid concessions in which toll revenues help the government cover the costs of its AP obligations.

Annual Privatization Report 2024 — Surface Transportation

The post Annual Privatization Report 2024 — Surface Transportation appeared first on Reason Foundation.

The post Annual Privatization Report 2023 appeared first on Reason Foundation.

Since the late 1980s, governments have privatized many state-owned infrastructure enterprises, including airports, electric utilities, gas utilities, pipelines, railroads, seaports, telecommunication providers, and toll roads. Some of these facilities were sold to investors, in whole or in part (e.g., many European airports). In most other countries, public infrastructure facilities were leased to investors under long-term public-private partnerships.

A growing number of governments are also using such public-private partnerships (P3s) to finance, build, and operate new airports or airport terminals, electricity facilities, seaports, and toll roads. The sale or lease of an existing facility is called a “brownfield” transaction (in part because significant refurbishment may be needed). By contrast, P3s for brand-new facilities are referred to as “greenfield” transactions.

In the United States, a significant amount of infrastructure is owned and operated by the private sector, including most U.S. energy production and distribution, electric and gas utilities, and a fraction of water and wastewater utilities. These assets may be held through publicly traded corporations or (in the case of energy) master limited partnerships, or they may be owned directly by private investors.

In transportation, however, nearly all U.S. airports, seaports, and toll roads are government-owned enterprises, generally by either state or local governments. Both brownfield and greenfield infrastructure projects require long-term financing.

In the public sector, such facilities are often financed 100% by government bonds, which in the United States are tax-exempt. When the private sector invests in infrastructure, it typically invests equity to cover part of the cost and finances the rest via either bank loans or long-term borrowing, such as revenue bonds.

These large financing needs have led to the development and growth of infrastructure investment funds, most of which raise equity to invest in privately owned or P3 infrastructure. Public pension funds, seeking to increase their overall return on investments, are also making significant equity investments in revenue-generating infrastructure. Likewise, insurance companies and sovereign wealth funds are investing equity in private or privatized infrastructure.

Inframation reports that in 2022 investors put $148.75 billion in new money into infrastructure investment funds.1 Pension funds continued to increase their investment in infrastructure, in most cases by placing a specific allocation with one or more of the infrastructure funds, but a handful of large pension funds have built professional staffs that enable them to make direct investments in individual facilities.

This report reviews 2022 developments in the infrastructure investment fund world, focusing on transportation infrastructure. While the scope of the report is global, it pays particular attention to U.S. developments in P3 infrastructure and the growth of U.S. pension fund investing in this field.

Part 2 reviews the continuing growth and scope of infrastructure investment funds worldwide.

Part 3 then provides an update on the largest companies and major P3 projects underway globally and in the United States.

Finally, Part 4 reviews pension funds’ increasing investment in revenue-generating infrastructure.

Annual Privatization Report 2023 — Transportation Finance

The post Annual Privatization Report 2023 — Transportation Finance appeared first on Reason Foundation.

In the second half of the 20th century, the world’s airports and air traffic control systems were essentially all departments of governments. Two events in 1987 launched an ongoing wave of organizational and government reforms. Those events were the privatization of the British Airports Authority (BAA), and the corporatization of the New Zealand government’s air traffic control (ATC) functions as Airways New Zealand.

BAA was privatized as a single entity comprising the three major London airports plus several other airports in the United Kingdom. Later government policy decisions led to selling Gatwick, Stansted, and two Scottish airports to new private owners. The improved performance of the privatized airports inspired a global wave of airport privatization and long-term public-private partnerships (P3s) that has resulted in over 100 large and medium-size airports being either sold to investors or long-term leased as revenue-based P3s—in Europe, Asia, Latin America, and elsewhere.

The outlier has been the United States, which has only two P3-leased airports (San Juan International and Tweed New Haven) and a small number of P3 arrangements for airport terminals and other individual facilities.

The corporatization of Airways New Zealand in 1987 also led to a global trend under which more than 60 countries subsequently separated their ATC systems from the government’s transport ministry and set them up as self-supporting corporations, regulated for safety at arm’s length from the government.

Within the first decade of this trend, the leading ATC providers organized a trade association called the Civil Air Navigation Services Organization (CANSO). Today, CANSO has 88 full members (providers of ATC services) and 91 associate members (mostly supplier companies). CANSO is the air traffic control counterpart of the global organizations for airlines (IATA) and airports (ACI).

This report reviews developments in the United States and worldwide regarding private-sector participation in airports, air traffic control, and airport security. While the United States remains an outlier when it comes to airport and air traffic control organization and governance, interest in airport privatization via long-term public-private partnership leases continues.

Annual Privatization Report 2023 — Aviation

Table of Contents

Part 1 Introduction

Part 2 Airports
2.1 Airport Privatization Overview
2.2 Airport Industry Changes in 2022
2.3 Global Airport Privatizations and P3 Concessions
2.4 US Airport Privatization and Public-Private Partnerships

Part 3 Air Traffic Control
3.1 Air Navigation Service Providers
3.2 Global Space-based ATC Surveillance
3.3 Digital, Remote Air Traffic Control Towers
3.4 Us Air Traffic Control Reform

Part 4 Airport Security
4.1 Contract Screening
4.2 Trusted Traveler

The post Annual Privatization Report 2023 — Aviation appeared first on Reason Foundation.

Governments have used long-term public-private partnerships for surface transportation projects for the past 60 years. As documented by José A. Gómez-Ibáñez and John Meyer, the phenomenon began in the 1950s and 1960s, as France and Spain emulated the model pioneered by Italy prior to World War II. Italy’s national motorway systems were developed largely by investor-owned or state-owned companies operating under long-term franchises (called concessions in Europe).

In exchange for the right to build, operate, and maintain the highway for a period ranging from 30 to 70 years, the company could raise the capital needed to build it (typically a mix of debt and equity). The model spread to Australia and parts of Asia in the 1980s and 1990s, and to Latin America in the 1990s and 2000s.

Nearly all the projects in those regions from the 1950s to 1980s were financed based on the projected toll revenues to be generated once the highway was in operation. Some projects went bankrupt as a consequence of reduced traffic and revenues during severe economic downturns (e.g., the oil price shock of 1974), leading to the nationalization of some companies.

In the late 1990s and early 2000s, however, the governments of France, Italy, Portugal, and Spain all privatized their state-owned toll road companies and formalized the toll concession P3 model. Australia has allowed several concession company entities to go through liquidation, with the assets (in each case major highway tunnels) being acquired by new operators at a large discount from the initial construction cost.

Other governments in Europe adopted a different form of highway concession. Generally, not favoring the use of tolls, they created the concept of availability payments as a means of financing long-term concession projects. In this structure, the company or consortium selected via a competitive process negotiates a stream of annual payments from the government sufficient (the company expects) to cover the capital and operating costs of the project and make a reasonable profit.

The capital markets generally find such a concession agreement compatible with financing the project, via a mix of debt and equity. Since no toll revenues are involved, this model applies to a much broader array of transport and facility projects, including rail transit and public buildings.

In the highway sector, nearly all long-term concession P3 projects in Canada, Germany, the United Kingdom, and a number of Central and Eastern Europe countries have been procured and financed as availability payment (AP) concessions.

In a small but growing number of cases—major bridges, as well as highway reconstruction that includes added express toll lanes, for example—governments collect the toll revenues and use the money to help meet their availability payment obligations. These cases are called hybrid concessions in this report.

Five of the top 10 worldwide public-private partnerships that reached financial close in 2022 used availability payments, continuing a growing trend over the last seven years. In 2021, seven of the top 10 P3s used availability payments. The growing use of AP concessions has enabled P3s for projects that do not generate their own revenues, as well as hybrid concessions in which toll revenues help the government cover the costs of its AP obligations.

Annual Privatization Report 2023 — Surface Transportation

Table of Contents

Part 2 Private Highway Projects

Part 3 International Surface Transportation Infrastructure 2022
3.1 Largest International Surface Transportation Public-Private Partnerships
3.2 Countries Reaching Financial Close on First Public-Private Partnership
3.3 International P3 Activity by Region

Part 4 Surface Transportation Concessions, 2022
4.1 Largest US Surface Transportation P3s
4.2 2021 Surface Transportation P3s

Part 5 Federal Policy on P3 Concessions
5.1 Surface Transportation Reauthorization
5.2 Overview of Financing Tools
5.3 Other Federal Tolling Policy

Part 6 P3 Legislation and Highway Activity by State
6.1 Overview of State P3 Legislation
6.2 2022 State Legislative P3 Activity
6.3 State Concession Activity

The post Annual Privatization Report 2023 — Surface Transportation appeared first on Reason Foundation.

In the second half of the 20th century, the world’s airports and air traffic control (ATC) systems were essentially all departments of governments. Two events in 1987 launched an ongoing wave of organizational and government reforms. Those events were the privatization of the British Airports Authority (BAA) and the corporatization of the New Zealand government’s ATC functions as Airways New Zealand.

BAA was privatized as a single entity comprising the three major London airports plus several other airports in the United Kingdom. Later government policy decisions led to selling Gatwick, Stansted, and two Scottish airports to new private owners. The improved performance of the privatized airports inspired a global wave of airport privatization and long-term public-private partnerships (P3s) that has resulted in over 100 large and medium-sized airports being either sold to investors or long-term leased as revenue-based P3s—in Europe, Asia, Latin America, and elsewhere. The outlier has been the United States, which has only one P3-leased airport (San Juan International) and a small number of public-private partnership arrangements for airport terminals and other individual facilities.

The corporatization of Airways New Zealand in 1987 also led to a global trend under which more than 60 countries subsequently separated their ATC systems from the government’s transport ministry and set them up as self-supporting corporations, regulated for safety at arm’s length from the government. Within the first decade of this trend, the leading ATC providers organized a trade association called the Civil Air Navigation Services Organization (CANSO). Today CANSO has 86 full members (providers of ATC services) and 88 associate members (mostly supplier companies). CANSO is the ATC counterpart of the global organizations for airlines (IATA) and airports (ACI).

The corporatization of Airways New Zealand in 1987 also led to a global trend under which more than 60 countries subsequently separated their air traffic control systems from the government’s transport ministry and set them up as self-supporting corporations, regulated for safety at arm’s length from the government.

This report reviews developments in the United States and worldwide regarding private-sector participation in airports, air traffic control, and airport security. While the United States remains an outlier when it comes to airport and air traffic control organization and governance, interest in airport privatization via long-term public-private partnership leases continues.

The post Annual Privatization Report 2022 —Aviation appeared first on Reason Foundation.

Since the late 1980s, governments have privatized many state-owned enterprises, including infrastructure such as airports, electricity, gas, railroads, seaports, telecommunication providers, and toll roads. Some of these facilities were sold to investors, in whole or in part (as is the case with many European airports). In other countries, public infrastructure facilities were leased to investors under long-term public-private partnerships (P3s). Thereafter, a growing number of governments also used such P3s to finance, build, and operate new airports or airport terminals, electricity facilities, seaports, and toll roads. The sale or lease of an existing facility is called a “brownfield” transaction (in part because significant refurbishment may be needed). By contrast, P3s for brand new facilities are referred to as “greenfield” transactions.

The sale or lease of an existing facility is called a “brownfield” transaction (in part because significant refurbishment may be needed). By contrast, P3s for brand new facilities are referred to as “greenfield” transactions.
In the United States, a significant amount of infrastructure is owned and operated by the private sector, including most U.S. energy production and distribution plus electric and gas utilities, as well as a fraction of water and wastewater infrastructure. These assets may be held through publicly traded corporations or (in the case of energy) master limited partnerships, or they may be owned directly by private investors. In transportation, however, nearly all U.S. airports, seaports, and toll roads are government-owned enterprises, generally by either state or local governments.

Infrastructure projects of both brownfield and greenfield types require long-term financing. In the public sector, such facilities are often financed 100% by government bonds, which in the United States are tax-exempt. When the private sector invests in infrastructure, it typically invests equity to cover part of the cost and finances the rest via either bank loans or long-term borrowing, such as via revenue bonds. These large financing needs have led to the development and growth of infrastructure investment funds, most of which raise equity to invest in privately owned or P3 infrastructure (though a more recent development is infrastructure debt funds, as well). Public pension funds, seeking to increase their overall return on investments, are also making significant equity investments in revenue-generating infrastructure.

Infrastructure Investor reports that during 2021 investors put $136 billion in new money into infrastructure investment funds. Pension funds continued to increase their investment in infrastructure, in most cases by placing a specific allocation with one or more of the infrastructure funds, but a handful of large pension funds have built professional staffs that enable them to make direct investments in individual facilities.

This report reviews 2021 developments in the infrastructure investment fund world, focusing on transportation infrastructure. While the scope of the report is global, it pays particular attention to U.S. developments in P3 infrastructure and the growth of U.S. pension fund investing in this field.

Part 2 reviews the continuing growth and scope of infrastructure investment funds worldwide.

Part 3 then provides an update on the largest companies and major P3 projects underway globally and in the United States.

Finally, Part 4 reviews pension funds’ increasing investment in revenue-generating infrastructure.

Annual Privatization Report 2022 — Transportation Finance

The post Annual Privatization Report 2022 — Transportation Finance appeared first on Reason Foundation.

Governments have used long-term public-private partnerships (P3s) for surface transportation projects for the past 60 years. As documented by José A. Gómez-Ibáñez and John Meyer, the phenomenon began in the 1950s and 1960s as France and Spain emulated the model pioneered by Italy prior to World War II.1 Italy’s national motorway systems were developed largely by investor-owned or state-owned companies operating under long-term franchises (called concessions in Europe). In exchange for the right to build, operate, and maintain the highway for a period ranging from 30 to 70 years, the company could raise the capital needed to build it (typically a mix of debt and equity). The model spread to Australia and parts of Asia in the 1980s and 1990s, and to Latin America in the 1990s and 2000s.

Nearly all the projects in those regions from the 1950s to 1980s were financed based on the projected toll revenues to be generated once the highway was in operation. Some projects went bankrupt as a consequence of reduced traffic and revenues during severe economic downturns (e.g., the oil price shock of 1974), leading to the nationalization of some companies. In the late 1990s and early 2000s, however, the governments of France, Italy, Portugal, and Spain all privatized their state-owned toll road companies and formalized the toll concession P3 model. Australia has allowed several concession company entities to go through liquidation, with the assets (in each case major highway tunnels) being acquired by new operators at a large discount from the initial construction cost.

Other governments in Europe adopted a different form of highway concession. Generally, not favoring the use of tolls, they created the concept of availability payments as a means of financing long-term concession projects. In this structure, the company or consortium selected via a competitive process negotiates a stream of annual payments from the government sufficient (the company expects) to cover the capital and operating costs of the project and make a reasonable profit. The capital markets generally find such a concession agreement compatible with financing the project, via a mix of debt and equity. Since no toll revenues are involved, this model applies to a much broader array of transport and facility projects, including rail transit and public buildings. In the highway sector, nearly all long-term concession P3 projects in Canada, Germany, the UK, and a number of Central and Eastern European countries have been procured and financed as availability payment (AP) concessions.

In a small but growing number of cases—major bridges, as well as highway reconstruction that includes the addition of express toll lanes, for example—governments collect the toll revenues and use the money to help meet their availability payment obligations. These cases are called “hybrid concessions” in this report.

Seven of the top 10 worldwide P3s that reached financial close in 2021 used availability payments, continuing a growing trend over the last seven years. The increasing use of AP concessions has enabled P3s for projects that do not generate their own revenues, as well as hybrid concessions in which toll revenues help the government cover the costs of its AP obligations.

Part 2 Private Highway Projects

Part 3 International Surface Transportation Infrastructure 2021
3.1 Largest International Surface Transportation Public-Private Partnerships
3.2 Countries Reaching Financial Close On First P3
3.3 International P3 Activity By Region

Part 4 U.S. Surface Transportation Concessions, 2021
4.1 Largest U.S. Surface Transportation P3s
4.2 2021 Surface Transportation P3s

Part 5 Federal Policy On P3 Concessions
5.1 Surface Transportation Reauthorization
5.2 Overview Of Financing Tools
5.3 Other Federal Tolling Policy

Part 6 P3 Legislation And Highway Activity Per State
6.1 Overview Of State P3 Legislation
6.2 2021 State Legislative P3 Activity
6.3 State Concession Activity

Annual Privatization Report 2022 — Surface Transportation

The post Annual Privatization Report 2022 — Surface Transportation appeared first on Reason Foundation.

Transportation Finance by Robert Poole

Surface Transportation by Baruch Feigenbaum

The post Annual Privatization Report 2022 appeared first on Reason Foundation.

In the second half of the 20th century, the world’s airports and air traffic control systems were essentially all run by government departments. Two events in 1987 launched an ongoing wave of organizational and government reforms. Those events were the privatization of the British Airports Authority (BAA) and the corporatization of the air traffic control functions of the New Zealand government as Airways New Zealand.

BAA was privatized as a single entity, comprising the three major London airports plus several other United Kingdom (UK) airports. Later government policy decisions led to selling Gatwick, Stansted, and two Scottish airports to new owners. The improved performance of the privatized airports inspired a global wave of airport privatization and long-term public-private partnerships (P3s) that has resulted in over 100 large and medium-sized airports being either sold to investors or long-term leased as revenue-based P3s—in Europe, Asia, Latin America, and elsewhere. The outlier has been the United States, which has only one P3-leased airport (San Juan International) and a small number of public-private partnership arrangements for airport terminals and other individual facilities.

The corporatization of Airways New Zealand in 1987 also led to a global trend under which more than 60 countries subsequently separated their air traffic control systems from the government’s transport ministry and set them up as self-supporting corporations, regulated for safety at arm’s length from the government. Within the first decade of this trend, the leading ATC providers organized a trade association, the Civil Air Navigation Services Organization (CANSO). Today, CANSO has 93 full members (providers of ATC services) and 89 associate members (mostly supplier companies). It is the air traffic control counterpart of the global organizations for airlines (IATA) and airports (ACI).

This report reviews developments worldwide and in the United States regarding private-sector participation in airports, air traffic control, and airport security. While the United States remains an outlier when it comes to airport and air traffic control organization and governance, interest in airport privatization via long-term P3 leases continues, as does interest in reform of the country’s ATC system.

Annual Privatization Report 2021 — Aviation

Part 1 Overview

Part 2 Airports
2.1 Airport Privatization Overview
2.2 Airport Industry Changes In 2020
2.3 Global Airport Privatizations And P3 Concessions
2.4 U.S. Airport Privatization And Public-Private Partnerships

Part 3 Air Traffic Control
3.1 Air Navigation Service Providers (ANSPs)
3.2 Global Space-Based Air Traffic Control Surveillance
3.3 Digital Remote Air Traffic Control Towers
3.4 U.S. Air Traffic Control Reform

Part 4 Airport Security
4.1 Contract Screening
4.2 Trusted Traveler

Annual Privatization Report 2021 — Aviation

Other chapters of the 2021 Annual Privatization Report are here and previous editions of the Annual Privatization Report are available here.

The post Annual Privatization Report 2021—Aviation appeared first on Reason Foundation.

Since the late 1980s, governments in developed (and some developing) countries have privatized many state-owned enterprises, including infrastructure such as airports, electricity, gas, railroads, seaports, telecoms, and toll roads. Some of these facilities were sold to investors, in whole or in part. In many other countries, enterprises of this kind were instead leased to investors under long-term public-private partnerships (P3s).

Thereafter, a growing number of governments also used such P3s to finance, build, and operate new airports or airport terminals, electricity facilities, seaports, and toll roads.

The sale or lease of an existing facility is called a “brownfield” transaction (in part because significant refurbishment may be needed). By contrast, P3s for brand new facilities are referred to as “greenfield” transactions.

In the United States, a significant amount of infrastructure is owned and operated by the private sector, including most U.S. energy production and electric and gas utility infrastructure as well as a portion of water and wastewater infrastructure. These assets may be held through publicly traded corporations or (in the case of energy) master limited partnerships, or they may be owned directly by private investors.

In transportation, however, nearly all airports, seaports, and toll roads are government-owned enterprises, generally by either state or local governments.

Infrastructure projects of both brownfield and greenfield types require long-term financing. In the public sector, such facilities are often financed 100% by government bonds, which in the United States are tax-exempt. When the private sector invests in infrastructure, it typically invests equity to cover part of the cost and finances the rest via either bank loans or long-term borrowing, such as via revenue bonds. These large financing needs led to the development and growth of infrastructure investment funds, most of which raise equity to invest in privately owned or P3 infrastructure (though a more recent development is infrastructure debt funds, as well). Public pension funds, seeking to increase their overall return on investments, have begun investing equity in such infrastructure as well.

In 2020, Infrastructure Investor reported that investors raised $102.6 billion in new money for infrastructure investment funds of this kind. Despite 2020 being an economically depressed year due to the COVID-19 pandemic, the amount raised was only $18 billion less than 2019’s total.

Pension funds continued to increase their investment in such infrastructure, in most cases by placing a specific allocation with one or more of the infrastructure funds, but a handful of large pension funds has built professional staffs that enable them to make direct investments in individual facilities.

This section of the Annual Privatization Report reviews 2020 developments in the infrastructure investment fund world, focusing on transportation infrastructure. While the scope of the report is global, it pays particular attention to U.S. developments in P3 infrastructure and the growth of U.S. pension fund investing in this field.

Transportation Finance

Table of Contents

Part 1 Introduction

Part 2 Major Infrastructure Investment Funds And Trends

2.1 Overview

2.2 Examples Of Divestitures And Acquisitions

2.3 Emergence of Long Term Funds

Part 3 P3 Companies And Projects

3.1 Global Companies and Projects

3.2 U.S. Companies and Projects

Part 4 Pension Fund Infrastructure Investing

4.1 Introduction

4.2 Recent Pension Fund Infrastructure Developments

4.3 Drawbacks Of Direct Investment And Asset-in-kind Transfers

Part 5 Supporting Infrastructure And Finance Information

5.1 Research Reports

5.2 Infrastructure Database Resources

Annual Privatization Report 2021 — Transportation Finance

Other chapters of the 2021 Annual Privatization Report are here and past editions of the Annual Privatization Report are available here.

The post Annual Privatization Report 2021 — Transportation Finance appeared first on Reason Foundation.

The post Annual Privatization Report 2021 appeared first on Reason Foundation.

Long-term public-private partnerships (P3s) for surface transportation projects have been used by governments for the past 60 years. As documented by José A. Gómez-Ibáñez and John Meyer, the phenomenon began in the 1950s and 1960s, as France and Spain emulated the model pioneered by Italy prior to World War II. Italy’s national motorway systems were developed largely by investor-owned or state-owned companies operating under long-term franchises (called concessions in Europe). In exchange for the right to build, operate, and maintain the highway for a period ranging from 30 to 70 years, the companies could raise the capital needed to build it (typically a mix of debt and equity).

The model spread to Australia and parts of Asia in the 1980s and 1990s, and to Latin America in the 1990s and 2000s.

Nearly all the projects in those regions from the 1950s to 1980s were financed based on the projected toll revenues to be generated once the highway was in operation.

Some projects went bankrupt as a consequence of reduced traffic and revenues during severe economic downturns (e.g., the oil price shock of 1974), leading to the nationalization of some companies.

In the late 1990s and early 2000s, however, the governments of France, Italy, Portugal, and Spain all privatized their state-owned toll road companies and formalized the toll concession P3 model.

Australia has allowed several concession company entities to go through liquidation, with the assets (in each case major highway tunnels) being acquired by new operators at a large discount from the initial construction cost.

Other governments in Europe adopted a different form of highway concession. Generally not favoring the use of tolls, they created the concept of availability payments as a means of financing long-term concession projects. In this structure, the company or consortium selected via a competitive process negotiates a stream of annual payments from the government sufficient (the company expects) to cover the capital and operating costs of the project and make a reasonable profit.

The capital markets generally find such a concession agreement compatible with financing the project, via a mix of debt and equity. Since no toll revenues are involved, this model applies to a much broader array of transport and facility projects, including rail transit and public buildings. In the highway sector, nearly all long-term concession P3 projects in Canada, Germany, the United Kingdom, and a number of Central and Eastern Europe countries have been procured and financed as availability payment (AP) concessions.

In a small but growing number of cases—major bridges, as well as highway reconstruction that includes the addition of express toll lanes, for example—governments collect the toll revenues and use the money to help meet their availability payment obligations. These cases are called “hybrid” concessions in this report.

Seven of the top 10 worldwide public-private partnerships that reached financial close in 2020 used availability payments, continuing a growing trend over the last six years. The growing use of AP concessions has enabled P3s for projects that do not generate their own revenues, as well as hybrid concessions in which toll revenues help the government cover the costs of its AP obligations.

Surface Transportation

Table of Contents

Part 1 Overview

Part 2 Private Highway Projects

Part 3 International Surface Transportation Infrastructure
3.1 Largest International Surface Transportation P3s
3.2 Countries Reaching Financial Close On First P3

Part 4 U.S. Highway Concession
4.1 Largest U.S. Highway P3s
4.2 2019 Highway P3s

Part 5 Federal Policy On P3 Concessions
5.1 Overview Of Financing Tools
5.2 A Recent History Of Federal Transportation Policy
5.3 Other Federal Tolling Policy

Part 6 P3 Legislation And Highway Activity By State
6.1 Overview Of State P3 Legislation
6.2 2019 State Legislative P3 Activity
6.3 State Concession Activity

Annual Privatization Report 2021 — Surface Transportation 

Other chapters of the 2021 Annual Privatization Report are here and past editions of the Annual Privatization Report are available here.

The post Annual Privatization Report 2021 — Surface Transportation appeared first on Reason Foundation.

Additionally, a substantial amount of U.S. infrastructure is owned and operated by the private sector, including most of the U.S. energy production and electric and gas utility infrastructure. These assets may be held through publicly traded corporations or (in the case of energy) master limited partnerships, or they may be owned directly by private investors.

Infrastructure projects of both brownfield and greenfield types require long-term financing. In the public sector, such facilities are often financed 100% by government bonds, which in the United States are tax-exempt. When the private sector invests in infrastructure, it typically invests equity to cover part of the costs, and finances the rest via either bank loans or long-term borrowing, such as via revenue bonds. These large financing needs led to the development and growth of infrastructure investment funds, most of which raise equity to invest in privately owned or P3 infrastructure (though a more recent development is infrastructure debt funds, as well). Public pension funds, seeking to increase their overall return on investments, have begun investing equity in such infrastructure as well.

During 2019, Infrastructure Investor reported that investors put a near-record $97.3 billion in new money into infrastructure investment funds of this kind. Pension funds continued to increase their investment in such infrastructure, in most cases by placing a specific allocation with one or more of the infrastructure funds, but a handful of large pension funds have built professional staffs that enable them to make direct investments in individual facilities.

This report reviews 2019 developments in the infrastructure investment fund world, focusing on transportation infrastructure. While the scope of the report is global, it pays particular attention to U.S. developments in P3 infrastructure and the growth of U.S. pension fund investing in this field.

Part 1 Introduction

Part 2 Major Infrastructure Investment Funds And Trends
2.1 Overview
2.2 Examples Of Divestitures And Acquisitions

Part 3 P3 Companies And Projects

Part 4 Pension Fund Infrastructure Investing
4.1 Introduction
4.2 Recent Pension Fund Infrastructure Developments
4.3 Drawbacks Of Direct Investment And Asset-in-kind Transfers

Part 5 Supporting Infrastructure And Finance Information
5.1 Research Reports
5.2 Infrastructure Database Resources

Annual Privatization Report 2020 — Transportation Finance

Other chapters of Annual Privatization Report 2020 are here and past editions of the Annual Privatization Report are available here.

The post Annual Privatization Report 2020 — Transportation Finance appeared first on Reason Foundation.

As documented by José A. Gómez-Ibáñez and John Meyer, the phenomenon began in the 1950s and 1960s, as France and Spain emulated the model pioneered by Italy prior to World War II.1 Italy’s national motorway systems were developed largely by investor-owned or state-owned companies operating under long-term franchises (called concessions in Europe). In exchange for the right to build, operate and maintain the highway for a period ranging from 30 to 70 years, the company could raise the capital needed to build it (typically a mix of debt and equity). The model spread to Australia and parts of Asia in the 1980s and 1990s, and to Latin America in the 1990s and 2000s.

Nearly all the projects in those regions from the 1950s to the 1980s were financed based on the projected toll revenues to be generated once the highway was in operation. Some projects went bankrupt as a consequence of reduced traffic and revenues during severe economic downturns (e.g., the oil price shock of 1974), leading to the nationalization of some companies. In the late 1990s and early 2000s, however, the governments of France, Italy, Portugal, and Spain all privatized their state-owned toll road companies and formalized the toll concession P3 model. Australia has allowed several concession company entities to go through liquidation, with the assets (in each case major highway tunnels) being acquired by new operators at a large discount from the initial construction cost.

Other governments in Europe adopted a different form of highway concession. Generally not favoring the use of tolls, they created the concept of availability payments as a means to finance long- term concession projects.

Other governments in Europe adopted a different form of highway concession. Generally not favoring the use of tolls, they created the concept of availability payments as a means of financing long-term concession projects. In this structure, the company or consortium selected via a competitive process negotiates a stream of annual payments from the government sufficient (the company expects) to cover the capital and operating costs of the project and make a reasonable profit. The capital markets generally find such a concession agreement compatible with financing the project, via a mix of debt and equity. Since no toll revenues are involved, this model applies to a much broader array of transport and facility projects, including rail transit and public buildings. In the highway sector, nearly all long- term concession P3 projects in Canada, Germany, the U.K., and a number of Central and Eastern European countries have been procured and financed as availability payment (AP) concessions.

In a small but growing number of cases—major bridges, as well as highway reconstruction that includes the addition of express toll lanes, for example—governments collect the toll revenues and use the money to help meet their availability payment obligations.3 These cases are called “hybrid” concessions in this chapter.

Eight of the top 10 worldwide P3s that reached financial close in 2019 use availability payments, continuing a growing trend over the last six years. The growing use of AP concessions has enabled P3s for projects that do not generate their own revenues, as well as hybrid concessions (discussed above) in which toll revenues help the government cover the costs of its AP obligations.

Part 1 Overview

Part 2 Private Highway Projects

Part 3 International Surface Transportation Infrastructure
3.1 Largest International Surface Transportation P3s
3.2 Countries Reaching Financial Close On First P3

Part 4 U.S. Highway Concession
4.1 Largest U.S. Highway P3s
4.2 2019 Highway P3s

Part 5 Federal Policy On P3 Concessions
5.1 Overview Of Financing Tools
5.2 A Recent History Of Federal Transportation Policy
5.3 Other Federal Tolling Policy

Part 6 P3 Legislation And Highway Activity By State
6.1 Overview Of State P3 Legislation
6.2 2019 State Legislative P3 Activity
6.3 State Concession Activity

Annual Privatization Report 2020 — Surface Transportation

Other chapters of Annual Privatization Report 2020 are here and past editions of the Annual Privatization Report are available here.

The post Annual Privatization Report 2020 — Surface Transportation appeared first on Reason Foundation.