BAA Walking Away From Airport Contract

When former Indianapolis Mayor Steve Goldsmith (R) inked a deal back in 1995 with BAA to manage the entire operations of the Indianapolis Airport Authority, it was viewed as a cutting edge initiative which promised savings to the public of nearly $100 million over the 10-year life of the contract. As recently as 2003, BAA boasted the Indianapolis contract as its largest because it managed the airport in its entirety, including all retail operations. BAA's regional USA director at the time described it as an "unusual contract" because only a handful of such arrangements existed in the country. But it's all coming to an end just as the airport readies its new midfield terminal, which is scheduled to open in 2008. BAA has apparently decided to walk away from its contract one year prior to its scheduled date for termination. The Star reports:

BAA Limited had been contracted to manage the airport through the end of 2008 but will instead turn over control at the end of this year.

Airport officials said in a press release that the change is meant to provide a smooth transition in advance of opening the new $1.07 billion midfield terminal in late 2008.

BAA had told the Indianapolis Airport Authority that it did not intend to seek a new contract or a contract extension when the current one expires, the statement said.

The airport authority and BAA are in discussions about how to transition back to full control by the airport authority. An agreement on the timing of the transition is expected to be reached in coming weeks.

Much of the existing management team will remain in place when BAA steps aside, the statement said.

Lacy Johnson, president of the Airport Authority board, credited BAA for improvements made at the airport.

"Their leadership in introducing a more commercial approach through expanding the airport's retail and parking offerings was paramount," Johnson said in the statement. "Their role contributed greatly to the development of additional non-airline revenue. We thank BAA for its role in the continued success of Indianapolis International Airport.

If privatization of the airport was such a great deal for the taxpayers, why would the Peterson administration now be turning it back over to the airport authority? And why would BAA be walking out early on a contract which it has boasted about for so long? The former British-owned company was purchased just last year by a Spanish company, Grupo Ferrovial SA for a whopping $19 billion. Grupo Ferrovial reported its first quarter earnings this year had more than quadrupled following the purchase of BAA.

One can't help but speculate whether Mayor Peterson's decision to hand control of the airport to Lacy Johnson didn't impact BAA's outlook on the contract. In June, 2004, the Indianapolis Star reported on a lawsuit brought against the airport authority by David Roberts, the man BAA hired to direct the airport's operations. Roberts made serious allegations in a lawsuit against Johnson and the airport authority after he said he was forced out of his job. The Star reported on June 4, 2004:

The former airport director at Indianapolis International Airport alleges he was fired last year for calling attention to "political opportunism" in airport hiring and contracts by an influential Democrat that Mayor Bart Peterson named as airport board president in 2000.

Indianapolis Airport Authority board President Lacy Johnson and board members attempted to influence airport staff to hire political favorites of Johnson, including an embalmer for whom there were no suitable job openings, according to a five-page notice of the former director's intention to file a lawsuit, which was recorded with the state and obtained by the Indianapolis Star."

Johnson attempted to influence employment of minorities, unionization of employees, allocation of space to airlines and concessionaires . . . engagement of favored contractors and suggested removal of BAA employees who were considered politically too Republican.

The former airport director, David Roberts, claims that in 2001 Johnson asked him to employ a "female state representative who was unqualified as an embalmer and who was a protege of Mr. Johnson's godmother."

The godmother "is also a Congresswoman," the complaint states, in an apparent reference to Indiana's only congresswoman--Julia Carson, a Democrat who represents Indianapolis.

When Mr. Roberts told Mr. Johnson there were no suitable vacancies, Mr. Johnson said, "Other companies do this," according to the complaint.

Johnson, an attorney at prominent Indianapolis firm Ice Miller, was out of the office and could not be reached for comment Thursday . . .

Roberts' lawsuit was quietly settled, and the local news media has long since forgotten about those events. Federal and local prosecutors were too busy chasing after low-level government corruption to notice Roberts' allegations. A local spokesman for BAA told WTHR's Mary Milz that the company was looking for a long-term contract with a larger stake in the airport, something airport officials didn't want. The idea that Johnson is going to have total control of the airport after the end of this year is troubling, particularly when you consider the amount of money at stake. You can bet taxpayers are going to come up on the short end of this stick.