Industry Outlook

June 8, 1999

Industry Outlook

Airport capacity, funding issues rank high for airports; airport-based businesses see rising costs of operating

BY Monica L. Rausch, Associate Editor

June 1999

Q: How has the 6-month limited FAA reauthorization in FY1999 impacted your airport?
Q: How many direct competitors do you have at your airport?
Q: How are you currently charged under your leasehold?

Be careful what one wishes for...that's what airports are learning. An increase in flights may bring more revenue, but future airport capacity is the top concern managers reported in a survey by AIRPORT BUSINESS.

To handle this increase, airports need a steady source of funding to build the needed infrastructure, and unfortunately Congress and FAA are still debating that one.

For airport-based businesses, the rising costs of doing business — insurance costs, fuel, taxes, and the possibility of user fees — seem to be on most managers' minds. Next are problems in finding and keeping staff, most notably, flight instructors and technicians, and issues with government regulations.

Here's more of what we uncovered in this year's survey.

The projected median number of operations for 1998 in last year's survey was 30,000, but the actual number reported in this year's survey was 48,000, revealing unpredicted growth. Still, managers have a conservative projected median of 45,000 operations for 1999.

To meet capacity needs, some 52 percent of airports report planning runway projects during the next year, and 26 percent will be working on terminal construction. Sixteen percent are planning construction/renovation for retail purposes.

In estimated capital funding needs for the next 5 years, respondents surveyed tallied a median of $4 million. The U.S. General Accounting Office recently released a report stating that the current annual funding for airports is some $3 billion short of planned development costs.

As for millennium issues, the majority of airports — 95 percent — say their facility will be Y2K compliant by the year 2000. Some 73 percent say they a have a formal Y2K compliance program.

Airport-based businesses
Of the airport-based businesses that responded to our survey, 66 percent were based on general aviation airports. Just under one third purchased aircraft in 1998. Another 41 percent plan to buy one or more aircraft in 1999.

Some 85 percent of airport business managers have access to the Internet; just under one-third offer Internet and e-mail services to customers. Two-thirds of the respondents have a Y2K compliancy program, and 94 percent say they will be ready for the year 2000.