GAI Florida Aviation Director and former airport director Jack Thompson, CM, LEED® AP discusses airport infrastructure funding needs and strategies to help fill funding gaps.
Insight Into Airport Infrastructure Funding Needs
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It is estimated that U.S. airports have nearly $100 billion in infrastructure needs through 2021 according to the Airport Infrastructure Needs 2017-2021 report published by the Airports Council International-North America (ACI-NA). This figure represents a 32-percent increase in estimated needs over the ACI-NA’s previous study published in 2015. Increases to Federal Aviation Administration (FAA) Airport Infrastructure Program (AIP) grants in the omnibus bill passed recently by Congress are welcome, yet these fall significantly short of ACI-NA report estimates. Increasingly, airports need to carefully coordinate potential sources of funding while optimizing possible revenue streams.
Coordinating Funding Sources
AIP funding eligibility normally prioritizes projects that address safety concerns and preservation of existing facilities—like rehabilitation of runways and taxiways. The opportunity presented by the supplemental AIP funding sees grants opened up to a wider range of airport infrastructure work, which presents a unique opportunity for smaller airports to upgrade their facilities. We support airports in formulating their Capital Improvement Programs (CIP)—identifying and prioritizing projects and assessing costs, then working through the multi-layered application process to qualify for airport infrastructure funding from the FAA and state sources.
Once grant commitments are in place, combined FAA and state agency funding can often cover a very high percentage of airport infrastructure costs—in cases up to 98 percent or more—with the balance absorbed by the airport itself. Yet, for many facilities, absorbing even a small percentage of development costs can present a considerable challenge. Here, airports need to explore ways to maximize possible revenue sources.
Creating Cash Flow
Airport landside property development is a strategy that can help airports operate profitably while covering gaps in grant funding or payout time lag. In addition to providing a steady revenue stream, landside development also holds potential benefits for the local community.
Landside development can take the form commercial properties—retail stores, restaurants, hotels, etc.—that provide the community with services and employment, and attract visitors to the area. Airport landside property can also be developed into industrial parks and other business locations. Both these options drive the local economy while providing the facility with a substantial and predictable income that can help finance both operations and airport infrastructure initiatives. We’re fortunate here at GAI to offer a multifaceted Community Solutions Group that can help aviation clients explore and plan landside development—determining the highest use of available land, navigating regulatory issues, and helping assess a development’s potential economic impact.
Hangar rental can be another significant revenue generator. Airports profit from optimizing hangar placement, layout, and access to accommodate a range of needs—from housing small recreational aircraft and corporate jets to commercial ‘fixed-base operators.’ In standard agreements, hangar sites can be leased by a tenant for a fixed period of time, the tenant will finance the structure’s construction and upkeep, and ownership of the hangar will revert to the airport upon expiration of the lease period. This provides the airport additional rental revenue with little to no capital expense, and increases the number of based aircraft.
Increased based aircraft and improved facilities can lead to added fuel sales—a reliable revenue source for airports. Building robust and environmentally compliant fuel farms is particularly attractive as the development of fueling facilities at non-primary airports is one of the few revenue-generating initiatives currently eligible for AIP grants.
Getting Projects off the Ground
About GAI’s Aviation Practice
Coupling a dedicated Aviation team with our Community Solutions Group and the expertise of more than 800 specialists companywide, GAI helps facility owners overcome challenges by creating airport development programs that meet AIP and local funding requirements, benefit the community and facility users, and support sustainable airport infrastructure growth.
Securing airport infrastructure funding can be a time consuming process that takes considerable expertise and coordination to pull off effectively—it’s increasingly important to formulate workable strategies that fill funding gaps and help airports get projects built in a challenging and competitive environment.
In my former role as an airport director and continuing in my current position at GAI, funding for airport infrastructure development has remained a key concern for facilities that are looking to better serve customers and their communities. While the challenges can be considerable, sound strategies for securing development grants and increasing revenue can help optimize the opportunities.
Contact GAI Florida Aviation Director Jack Thompson, CM, LEED® AP for more information about airport infrastructure funding and GAI’s comprehensive aviation consulting services.
Jack Thompson, CM, LEED® AP has more than 20 years’ experience with project and airport management in the aviation industry across the southern United States. Jack is a Certified Member of the American Association of Airport Executives and a Leadership in Energy and Environmental Design Accredited Professional. As an industry advocate, Jack is an active member of the American Association of Airport Executives, Florida Airports Council, and numerous FDOT Airport Advisory Groups.
