A Different Airport Model

Branson’s new privately funded commercial airport offers a unique economic structure

BRANSON, MO — In an effort to increase the city’s tourism base, further establish a nationally valued destination, and turn a profit, a group of investors has funded the construction and operation of the new Branson Airport. Independence from government red tape allows the airport to operate as a private business free to negotiate with tenants in a unique way; that is, free from being subject to the federal grant assurances required by publicly owned and operated airports. Says airport director Jeff Bourk, “As a private entity airport, we are driven to enhance the traveler experience by providing top quality service coupled with low-cost fares.”

Located on 922 acres in the Ozark foothills of Taney County, Missouri, the privately funded commercial service airport opened to the public May 11. With air service initially provided by low-fare carriers AirTran and Sun Country Airlines, airport investors seek to capture a sizable portion of the 5.4 million leisure travelers who drive 300 miles and more to Branson each year.
With a population of just 7,500, Branson sees some eight and a half million visitors to the region each year. “Branson is a year-round valued family destination,” says Bourk, executive director of Branson Airport LLC. According to Bourk, leisure travelers flying in to reach Branson must land at airports in Kansas City, St. Louis, or Tulsa, and then drive a good distance.

Fayetteville and Springfield airports are the closest to Branson and are great airports, says Bourk, but they serve a business market and offer higher fares.

“Branson is the 20th largest tourism destination in the country by nights’ stay, and there is no airport here able to handle that market,” says Bourk.

Absolutely no federal grant money was used in the construction of the airport, which began in 2007. According to Bourk, that makes Branson Airport the first fully privatized commercial service for-profit airport in the country.

“This airport is the first where the runway, control tower, ILS approach, lead-in lights, and all other Airport Improvement Program (AIP) eligible projects were paid for by the investing group and revenue bonds. All of the rules that exist when accepting federal grant money do not apply to this project; no grant assurances apply to us.

“Grant assurances tie an airport’s hands in many ways, including the way deals and negotiations are made with airlines and venders. Here, deals offered to each airline will be dependent on the merit of the market.

“What does apply are all FAA safety standards, and all TSA security requirements; all of those aspects are done exactly the same as any other commercial airport in the U.S.,” says Bourk.

The financing
The total investment of the Branson Airport comes to $155 million; $115 million in publicly traded tax-exempt revenue bonds through Citigroup, and $40 million in private equity.

While federal, state, and local taxpayers paid nothing for the construction or operation of the airport, the City of Branson has agreed to pay Branson Airport LLC $8.24 for every passenger the airport brings into the region.

“It’s a great deal for the city,” says Bourk. “They don’t have near the risk that our business holds, whether we succeed or not. They make that back on sales tax and such that the visitor spends while in town.

“It’s a great investment for them, and it’s a major factor in our ability to complete and open this project; it’s a revenue stream that we wouldn’t otherwise have.”

The financial commitment of the City is capped at $2 million per year, and no more than $500,000 per quarter.

The main assets of the airport, which were funded and built with the tax-exempt bonds, will eventually be owned by the county, explains Bourk. The land was gifted to the county, which in turn leased it to a transportation development district in Taney County. The transportation development district, a political subdivision of the state of Missouri, issued the revenue bonds for the construction of the airport’s main assets, and leased the property to Branson Airport LLC for 45-50 years, says Bourk.

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