Carrier right-sizing and a challenging economy among top issues for airports

“Even with the passage of the American Recovery and Reinvestment Act, there is a declining long-term trend of taxpayer support for aviation programs,” he relates.

A passenger facility charge (PFC) increase is critical, says Van Beek. Had PFCs been indexed to inflation, he adds that the ceiling would be worth $8.14 today. Currently, the value of the $4.50 PFC is worth $2.52 in today’s dollars.

It is also critical, he says, that Congress extend the Alternative Minimum Tax (AMT) holiday and the Build American Bonds, stating, “Airport bonds continue to be a vital tool to leverage resources and to finance projects, particularly in this time of low interest rates.

Van Beek offers three issues that should shape airport policy priorities:

1) Seek new sources of public and private capital.

Federal efforts with TIGER grants (intermodal discretionary), innovative finance (infrastructure bank, TIFIA), and incentivizing privatization provide options to the traditional and shrinking trust fund sources.

2) Prioritize transportation system investments that include aviation.

Move away from modal focus to system-based solutions, including the aligning and integrating of air and surface networks; implementing NextGen; and promoting efficient use of congested facilities through operations, incentives, and pricing.

3) Tackle climate change and promote sustainability.

International and national concern over environmental issues and energy use require more focus on reducing emissions and saving fuel.

Recommendations Van Beek offers for transportation providers include:

• Policy Context is Dynamic. Pressures to restore the economy, deal with the nation’s debt and deficit issues, and shift policy priorities will make this a fluid policy environment for the next several years. Be responsive to the change.

• Promote Sustainability. Analyze the agency’s carbon footprint and energy use. Prioritize the highest return, lowest cost solutions and move to instill sustainability throughout the organization.

• Define Projects for the Policy Context. What contributions will particular projects make to the new set of national priorities?

• Practice Inclusive Planning on a Metropolitan and Regional Basis. Most regions, reinforced by federal policy, do not effectively tie public and private, passenger and freight, and modal planning together. To make system improvements, better integration of planning is required.

• Help Educate Policymakers and Shape Authorizations: There are many misconceptions about transportation; the industry needs to define the benefits and help redesign all transportation programs.

Airport Privatization

Privatization is not a panacea, relates Sheri Ernico, director at Leigh/Fisher, a management consulting firm.

“Private airports are not necessarily the most profitable or efficient,” she adds. Many airports serve broader community interests, and some private airports lack incentives to serve broader constituencies. “Commercial performance is more dependent on factors such as infrastructure, tax rates, percent of international passengers, etc.,” explains Ernico.

Apart from that, there are also many barriers to airport privatization in the U.S., from access to cheap tax-exempt debt to restrictions on revenue diversion to collective bargaining agreements and public sector unions, says Ernico. This makes the U.S. airport model unique.

When considering airport privatization, Ernico says there are many resources airports should evaluate, including:

  1. Lessons learned from worldwide airport privatization;
  2. Lessons learned from privatization in non-airport transportation modes;
  3. Legal regulatory framework;
  4. Domestic policy context (AIP, PFC, tax-exempt bonds, municipal budget deficits, etc.);
  5. Stakeholder interests and concerns;
  6. Case studies; and
  7. Decision tree matrix and evaluation checklist.

FAA compliance division’s Kevin Willis explains that privatization is a local decision “ ... and our role is to review that decision. We look at privatization as a management tool,” adding that one size does not fit all when it comes to airport privatization.

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