Statement of Luis Vega Ramos to the FAA regarding the propossed privatization of the Luis Muñoz Marín Airport (SJU)

 

Good Morning. My name is Luis Vega-Ramos and I am an At-Large Member of the Puerto Rico House of Representatives. Since the proposed transaction is one of the utmost importance and could entail serious long term consecquences for the quality of life, the economny and even the security of the people of Puerto Rico, I have decided to present my comments in English so that I make sure that you understand the corncerns this proposed privatization raises for me and for many of my constituyents.

 

First, I must address the alleged transparency of the process. I am the ranking member of my party's delegation in House Ways and Means Committee. In our committee, the budgetary concerns, the sorces of revenue of economic committments of the government of PR are discussed and overseen. Yet, we have not been presented by the Government of PR this proposed transaction four our consideration. With that in mind, imagine the lack of information that the general public in PR has regarding this.

 

I will be submitting via e-mail a longer, more detailed, version of this testimony sometime during the following days.

 

I will summarize my objections and concerns in the following six (6) statements:

 

1. Puerto Rico's SJU Airport is and through the life of the proposed contract, will continue to be, our main facility for air traffic to and from Puerto Rico. The reality of Puerto Rico being a group of islands, makes the prospect of having our most important entrance and exit port in private hands for some four decades a very risky proposition. As a matter of federal policy, the U.S. Goverment has decided that the private management of Interenational Airports be a very scrutinized exception, a pilot program, and not the general norm. Puerto Rico's SJU Airport is an extremely bad candidate to be the guinea pig for the never before conducted experiment of having an International Airport of a jurisdiction under the FAA's authority to be put in private hands.

 

2. The financial structure of the proposed transaction between the Aerostar Airport Holdings group and the Government of Puerto Rico is one that is set mainly to augment the effective value of the winnings made by the private entity and to, inversely reduce the effective value of the ammounts to be paid to the Government of Puerto Rico. One of Puerto Rico's leading economists, whose study will be presented through the course of this hearfing, has concluded that through the course of this Public Private Partnership, the Government of Puerto Rico will loose around 62% of the real value of the operations of the SJU Airport. Said analysis states that the Government of Puerto Rico would loose over $1 billion of the real and present value of the operation of SJU through the effectivenes of the contract. Simply, this deal privatizes earnings for Aerostar and leaves the enterprise's risk and loses burden squarely on the People of Puerto Rico.

 

3. On that regard, the Puerto Rico Ports Authority will incur in a $669 million bond issue to remove current debt from SJU's books so that it may transfer said facility free of any major economic obligations. Furthermore, the way this bond issue is going to be paid back also favors the private partner substantiaslly for the very same reasons previously explained. In effective and present value, what they get is a lot better than what they have to give back.

 

4. The FAA should not be led to believe what common sense shows to be untrue. The upfront gains for Aerostar are directly dependent on the concentration of passenger flights on SJU. Plain and simple. That concentration of passenger traffic on SJU will have dire effects on the regional airports' strategic development plans and their role as stimulants of economic growth on the areas they serve. Effect of regional tourism and economic plans. Also the proposed plan to subsidized flights from SJU to Culebra will have ill effects on local providers of that route. The Governor of Puerto Rico misrepresented the situation in his letter of support for tbhe incentive program that will have grave consecqwuences for three local providers. There are also ongoing legal suits so that some of the current tennants of the Isla Grande Airport, very close to SJU, be thrown out.

 

5. Today's press reports that both the Government and interested parties of the transaction have been exerting presure on local business leaders and organization to gain support where there is no basis to support the conclusion thgat thius deal will be good for the Puerto Rico business community. If you add the valid concerns of labor organizations and the current tennants of SJU, it is c lear that the proponents of the deal have yet to prove how tbhis is gvoing to be good for the Puerto Rican economy.

 

6. This administration has stated that the Private Public Partnership program would have created some 99,000 new jobs. This has not happened. That track record prevents us to accept the administrations job creation estimates for this proposed transaction as valid ones.

 

Finally, I want to stress the fact that Puerto Rico has general elections in little more than a month. This transaction being as complex and controversial as it is, we strongly urge that final consideration by the FAA be withheld until the inauguration of the next governmental period that starts on January 2, 2013. The mere possibility of an outgoing administration making a forty year committment on our most important airport facility on its last very days MUST NOT be allowed by you. If you choose to greenlight or stop this deal, it should be left to the next Puerto Rican government, whichever it turns out to be, to have the complete responsibility and authority to strike thru or strike down the final deal.