Growing Trend

April 9, 2007

European countries developed the idea of privatization of roads and highways back in the 1960s to compensate for governments that lacked the funding to build new roads or maintain existing roads. The trend in Europe, however, was less about leasing existing roadways and more about building and maintaining new ones.

European countries developed the idea of privatization of roads and highways back in the 1960s to compensate for governments that lacked the funding to build new roads or maintain existing roads. The trend in Europe, however, was less about leasing existing roadways and more about building and maintaining new ones. For example, the first project that Cintra, a leading private developer of transport infrastructures, leased was a roadway that connected Bilbao in northern Spain with Behobia in southern France—a project that was awarded in 1968 and was just turned back over to the government in 2003. The United Kingdom, Italy, Portugal and France also are familiar with the concept.

In recent years, the idea has made its way to the U.S., starting with the leasing of the Chicago Skyway in 2005 and then the Trans Texas Corridor. In these instances, existing roadways were leased from the government or city, allowing the money to be used for other projects.

The industry is experiencing continuous growth in the area of infrastructure concessions, particularly due to Europe’s successful model. Spain itself has made significant contributions globally toward the shift to leasing infrastructure. Spanish companies lead the international market of concessions for infrastructure development, boasting six of the top 10 transportation concession companies that are responsible for constructing and managing about 40% of all major transportation concessions in the world.

Since Cintra began operating the Skyway in January 2005 under the Skyway Concession Co. LLC (SCC), it has seen a growth rate of 4.5% in 2006 over 2005, up 2% over 2004.

Cintra currently manages 25 toll highways (almost 3,000 km) in Spain, Portugal, Ireland, Italy, Greece, Chile, Canada and the U.S.

Privately run tollways have proved similar to those run by the government from a management and maintenance perspective, but private companies strive to maintain and operate the roads better than their public counterparts, as that is the very key of the success of their business model. To ensure proper upkeep, capital improvement protocol was built into the original Chicago Skyway contract and holds SCC to a strict schedule for improvements. The consumer benefit of a privately operated roadway is that companies—like SCC—are self-funded, allowing them to be more efficient and flexible in both planning and daily operations that pertain to traffic patterns. Since SCC’s started to run the Chicago Skyway, they have implemented IPass/E-ZPass lanes that today account for nearly 40% of all collected tolls. They also re-opened three reversible lanes in the summer of 2006 that were previously not operational. Near-future projects include two additional lanes at the westbound toll plaza and one additional westbound lane between Colfax Avenue and the toll plaza.

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