18 AIRPORTMAGAZINE.NET | DECEMBER 2013/JANUARY 2014
design-build, finance, operate, maintain, DBOM.
There are various flavors that this comes in.
There’s a lot of interest in that now. Not all
the airports or the communities they serve have
enabling legislation to allow them to use that. So,
I think you are seeing a lot of people watch with
interest what’s going on. I think, Katherine, you
brought up LaGuardia, LaGuardia’s P3 process.
We’ve seen Midway struggle with it a little bit.
There are great opportunities with a P3 process
to use other people’s money, but private money
is still more expensive than public money today.
So there is that weight of the cost of money, but
then, on the other hand, there is the opportunity
to deliver things sooner. There’s integrated project
delivery, which is more like a framework where
everybody comes together as one entity and creates
the project risk sharing and also sharing reward.
We don’t see near as much of that here in the
U.S. We will see more of that over in the U.K. But I
think there are great opportunities. The big trick —
at least on P3 and using other people’s money — is
revenue risk. With an airport with demand risk
and depending upon the size of the airport, it may
be one thing for LaGuardia that has a pretty stable
demand, but for another airport — and you’re
wondering how the demand is going to be — it
may not return the investment. It may be harder to
find that money.
Availability payments, we see on the toll
road side a lot of times, and that’s probably
easier to find a company or companies willing
to finance that. (Editor’s note: An availability
payment is a payment for performance made
irrespective of demand. Availability payments can
be an attractive financing and project delivery
alternative for projects that, for reasons related to
policy, public perception and/or profitability, are
not feasible or advisable under a user-fee based
So the question I have that we talk about a lot
is, can we find opportunities on the airport side
to use availability payments to get P3s? We may
be able to do it on parking. It may be a little more
difficult on the terminal side if you’re looking
for somebody to bring you the money in the
first place. Then it still may be difficult to make
BREWER: Are you seeing that?
GOUDREAU: The thing that Roddy and I were
discussing beforehand was the same thing. In order
to attract a private firm to invest in your airport,
where are they going to get their ROI? What do you
have that is going to return what they have now
invested in your upgrades? Concessions? Parking?
Not a whole lot else.
From an airline side or an airport side, maybe
cargo facilities. Maybe there is some deal where
you can go ahead and get a company interested in
owning your hangar or your cargo facility. Maybe
there is some return on investment that can be
gained there. I think it’s a great idea. I am not sure
how applicable it is going to be or how practical it
is going to be to the airport side of the house. How
are you going to attract these investors? What do
you have to offer them?
BOGGUS: It depends what gets thrown in the mix.
How much of rates and charges is part of that?
How much of advertising is part of it? And I think
it really becomes an exercise for the developer in
Now, remember, typically that’s an O&M
component, so there’s a lease to operate that
airport — or that terminal, I should say, since we
don’t do privatized airports — to have that money
come back, but can you think out of the box and
find other ways to make money, to make revenue
off of your terminal lease?
CHANG: I think these alternative ways of
delivering projects, even more specifically, how
to finance these projects, will be important
discussions, particularly as airports try to increase
their alternative non-aeronautical revenue base.
Projects involving cargo complexes, airport city
projects and airport business centers are going
to involve some alternative financing sources,
involving funds other than the airports. So, the
decision as to how much control an airport retains
or gives up will have to be weighed against the
benefits an airport receives from these projects.
This will be a decision going forward for those
kinds of developments.
SANDIFER: For us, Mark, in terms of trends
and project delivery, certainly I think the vast
majority of projects we do, design-bid-build
is the predominant way to deliver. [We are]
seeing an increasing amount of construction
management, construction management risk
activity, predominantly on the building, the vertical
side, which I think is a very good trend, because,
frankly, you know, a design-bid-build process by