Things should be looking up for
airport capital development.
The financial crisis is mostly behind us, with stocks recenty hitting all-time highs. Airlines have consolidated and are finally profitable. Congress
fully funded the administration’s AIP request in January,
and government shutdowns are off the table (for a while).
With much uncertainty in the past, it should be time to
recharge dormant capital programs. And it is … but not
by following the old rules.
The reality is airports are becoming tapped out in their
ability to finance major capital improvements. PFCs have
been highly leveraged, with no guarantee of increases.
Debt levels and cost per enplanement (CPE) are reaching
the pain point at many airports. Discretionary AIP is
likely to keep trending downward — and it doesn’t fund
many key projects anyway.
So what’s an airport to do? The good news is that
innovation in infrastructure funding and financing is
increasing in the U.S. The bad news is that very few
of these deals involve airports. Of approximately 150
alternate project delivery transportation projects listed in
Public Works Financing’s scorecard of North American
projects with private involvement, only seven have
airport elements (primarily airport access projects).
Public-private partnerships (P3) that bring money to
projects have proven difficult for U.S. airports. FAA’s
Privatization Pilot Program has had just 1. 5 successes.
There is some positive news as the LaGuardia Central
Terminal is being developed as a P3 outside the pilot
program, and Gary/Chicago International Airport is
entering a P3 to develop up to $100 million of assets.
However, complexity and procurement expense have
limited such projects. There are a number of reasons
why innovation is more difficult at airports than in
■ ■ COMPLEXITY: Toll roads and transit systems are
simpler investments to manage than airports, which
are primarily landlords for airlines, tenants, and other
stakeholders — all of whom must be on board with the
P3 and who control airport activity levels. By contrast,
surface transport owners tend to directly control most
aspects of their systems.
■ ■ REGULATION: Airports must adhere to a wider range
of regulations than surface transport agencies. At its
simplest, taking money off the airport generally is not
allowed, but rules on the use of PFCs and AIP funds,
Drawn From Surface
BY LOUIS WOLINETZ
✔■Capture project value
✔■Encourage better asset utilization
✔■Expand funding\financing toolbox