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AIRPORT
ACRPSYNTHESIS 1
COOPERATIVE
RESEARCH
PROGRAM
Innovative Finance
and Alternative Sources
of Revenue for Airports
OCR for page R2
ACRP OVERSIGHT COMMITTEE* TRANSPORTATION RESEARCH BOARD 2007 EXECUTIVE COMMITTEE*
CHAIR OFFICERS
JAMES WILDING Chair: Linda S. Watson, CEO, LYNXCentral Florida Regional Transportation Authority, Orlando
Independent Consultant Vice Chair: Carol A. Murray, Commissioner, New Hampshire DOT, Concord
Executive Director: Robert E. Skinner, Jr., Transportation Research Board
VICE CHAIR
MEMBERS
JEFF HAMIEL
MinneapolisSt. Paul Metropolitan J. BARRY BARKER, Executive Director, Transit Authority of River City, Louisville, KY
Airports Commission MICHAEL W. BEHRENS, Executive Director, Texas DOT, Austin
ALLEN D. BIEHLER, Secretary, Pennsylvania DOT, Harrisburg
MEMBERS JOHN D. BOWE, President, Americas Region, APL Limited, Oakland, CA
LARRY L. BROWN, SR., Executive Director, Mississippi DOT, Jackson
JAMES CRITES
DEBORAH H. BUTLER, Vice President, Customer Service, Norfolk Southern Corporation
DallasFt. Worth International Airport
and Subsidiaries, Atlanta, GA
RICHARD DE NEUFVILLE
ANNE P. CANBY, President, Surface Transportation Policy Partnership, Washington, DC
Massachusetts Institute of Technology
NICHOLAS J. GARBER, Henry L. Kinnier Professor, Department of Civil Engineering, University
KEVIN C. DOLLIOLE
of Virginia, Charlottesville
LambertSt. Louis International Airport
ANGELA GITTENS, Vice President, Airport Business Services, HNTB Corporation, Miami, FL
JOHN K. DUVAL
SUSAN HANSON, Landry University Professor of Geography, Graduate School of Geography,
MassportBoston Logan
Clark University, Worcester, MA
International Airport
ADIB K. KANAFANI, Cahill Professor of Civil Engineering, University of California, Berkeley
STEVE GROSSMAN
HAROLD E. LINNENKOHL, Commissioner, Georgia DOT, Atlanta
Oakland International Airport
MICHAEL D. MEYER, Professor, School of Civil and Environmental Engineering, Georgia
TOM JENSEN
Institute of Technology, Atlanta
National Safe Skies Alliance
DEBRA L. MILLER, Secretary, Kansas DOT, Topeka
CATHERINE M. LANG
MICHAEL R. MORRIS, Director of Transportation, North Central Texas Council of
Federal Aviation Administration
Governments, Arlington
GINA MARIE LINDSEY
JOHN R. NJORD, Executive Director, Utah DOT, Salt Lake City
McBee Strategy Consulting
PETE K. RAHN, Director, Missouri DOT, Jefferson City
CAROLYN MOTZ
SANDRA ROSENBLOOM, Professor of Planning, University of Arizona, Tucson
Hagerstown Regional Airport
TRACY L. ROSSER, Vice President, Corporate Traffic, Wal-Mart Stores, Inc., Bentonville, AR
RICHARD TUCKER
ROSA CLAUSELL ROUNTREE, Executive Director, Georgia State Road and Tollway Authority,
Huntsville International Airport
Atlanta
HENRY G. (GERRY) SCHWARTZ, JR., Senior Professor, Washington University, St. Louis, MO
EX OFFICIO MEMBERS
C. MICHAEL WALTON, Ernest H. Cockrell Centennial Chair in Engineering, University of
SABRINA JOHNSON Texas, Austin
U.S. Environmental Protection Agency STEVE WILLIAMS, Chairman and CEO, Maverick Transportation, Inc., Little Rock, AR
RICHARD MARCHI
Airports Council International EX OFFICIO MEMBERS
North America
THAD ALLEN (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard, Washington, DC
JOHN M. MEENAN
THOMAS J. BARRETT (Vice Adm., U.S. Coast Guard, ret.), Pipeline and Hazardous Materials
Air Transport Association of America
Safety Administrator, U.S.DOT
HENRY OGRODZINSKI
MARION C. BLAKEY, Federal Aviation Administrator, U.S.DOT
National Association of State Aviation
JOSEPH H. BOARDMAN, Federal Railroad Administrator, U.S.DOT
Officials
JOHN A. BOBO, JR., Acting Administrator, Research and Innovative Technology Administration,
ROBERT E. SKINNER, JR.
U.S.DOT
Transportation Research Board
REBECCA M. BREWSTER, President and COO, American Transportation Research Institute,
TOM ZOELLER
Smyrna, GA
American Association of Airport
GEORGE BUGLIARELLO, Chancellor, Polytechnic University of New York, Brooklyn,
Executives
and Foreign Secretary, National Academy of Engineering, Washington, DC
J. RICHARD CAPKA, Federal Highway Administrator, U.S.DOT
SECRETARY
SEAN T. CONNAUGHTON, Maritime Administrator, U.S.DOT
ROBERT J. REILLY EDWARD R. HAMBERGER, President and CEO, Association of American Railroads,
Transportation Research Board Washington, DC
JOHN H. HILL, Federal Motor Carrier Safety Administrator, U.S.DOT
JOHN C. HORSLEY, Executive Director, American Association of State Highway and Transportation
Officials, Washington, DC
J. EDWARD JOHNSON, Director, Applied Science Directorate, National Aeronautics
and Space Administration, John C. Stennis Space Center, MS
WILLIAM W. MILLAR, President, American Public Transportation Association, Washington, DC
NICOLE R. NASON, National Highway Traffic Safety Administrator, U.S.DOT
JEFFREY N. SHANE, Under Secretary for Policy, U.S.DOT
JAMES S. SIMPSON, Federal Transit Administrator, U.S.DOT
CARL A. STROCK (Lt. Gen., U.S. Army), Chief of Engineers and Commanding General,
U.S. Army Corps of Engineers, Washington, DC
*Membership as of January 2007. *Membership as of January 2007.
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AIRPORT COOPERATIVE RESEARCH PROGRAM
ACRP SYNTHESIS 1
Innovative Finance
and Alternative Sources
of Revenue for Airports
A Synthesis of Airport Practice
CONSULTANT
CINDY NICHOL
Jacobs Consultancy
Burlingame, California
S UBJECT A REAS
Aviation and Planning and Administration
Research Sponsored by the Federal Aviation Administration
TRANSPORTATION RESEARCH BOARD
WASHINGTON, D.C.
2007
www.TRB.org
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AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP SYNTHESIS 1
Airports are vital national resources. They serve a key role in Project 11-03, Topic S01-01
transportation of people and goods and in regional, national, and ISSN 1935-9187
international commerce. They are where the nation's aviation sys- ISBN 978-0-309-09783-3
tem connects with other modes of transportation and where federal Library of Congress Control Number 2007923932
responsibility for managing and regulating air traffic operations
© 2007 Transportation Research Board
intersects with the role of state and local governments that own and
operate most airports. Research is necessary to solve common oper-
ating problems, to adapt appropriate new technologies from other
industries, and to introduce innovations into the airport industry. COPYRIGHT PERMISSION
The Airport Cooperative Research Program (ACRP) serves as one Authors herein are responsible for the authenticity of their materials and for
of the principal means by which the airport industry can develop obtaining written permissions from publishers or persons who own the
innovative near-term solutions to meet demands placed on it. copyright to any previously published or copyrighted material used herein.
The need for ACRP was identified in TRB Special Report 272: Cooperative Research Programs (CRP) grants permission to reproduce
Airport Research Needs: Cooperative Solutions in 2003, based on material in this publication for classroom and not-for-profit purposes.
a study sponsored by the Federal Aviation Administration (FAA). Permission is given with the understanding that none of the material will
The ACRP carries out applied research on problems that are shared be used to imply TRB or FAA endorsement of a particular product, method,
by airport operating agencies and are not being adequately or practice. It is expected that those reproducing the material in this
addressed by existing federal research programs. It is modeled after document for educational and not-for-profit uses will give appropriate
the successful National Cooperative Highway Research Program acknowledgment of the source of any reprinted or reproduced material. For
and Transit Cooperative Research Program. The ACRP undertakes other uses of the material, request permission from CRP.
research and other technical activities in a variety of airport subject
areas, including design, construction, maintenance, operations,
safety, security, policy, planning, human resources, and adminis- NOTICE
tration. The ACRP provides a forum where airport operators can
cooperatively address common operational problems. The project that is the subject of this report was a part of the Airport
The ACRP was authorized in December 2003 as part of the Cooperative Research Program conducted by the Transportation Research
Vision 100-Century of Aviation Reauthorization Act. The primary Board with the approval of the Governing Board of the National Research
participants in the ACRP are (1) an independent governing board, Council. Such approval reflects the Governing Board's judgment that the
the ACRP Oversight Committee (AOC), appointed by the Secretary project concerned is appropriate with respect to both the purposes and
resources of the National Research Council.
of the U.S. Department of Transportation with representation from
The members of the technical advisory panel selected to monitor this
airport operating agencies, other stakeholders, and relevant indus-
project and to review this report were chosen for recognized scholarly
try organizations such as the Airports Council InternationalNorth
competence and with due consideration for the balance of disciplines
America (ACINA), the American Association of Airport Execu-
appropriate to the project. The opinions and conclusions expressed or
tives (AAAE), the National Association of State Aviation Officials implied are those of the research agency that performed the research, and
(NASAO), and the Air Transport Association (ATA) as vital links while they have been accepted as appropriate by the technical panel, they
to the airport community; (2) the TRB as program manager and sec- are not necessarily those of the Transportation Research Board, the National
retariat for the governing board; and (3) the FAA as program spon- Research Council, or the Federal Aviation Administration of the U.S.
sor. In October 2005, the FAA executed a contract with the National Department of Transportation.
Academies formally initiating the program. Each report is reviewed and accepted for publication by the technical
The ACRP benefits from the cooperation and participation of air- panel according to procedures established and monitored by the
port professionals, air carriers, shippers, state and local government Transportation Research Board Executive Committee and the Governing
officials, equipment and service suppliers, other airport users, and Board of the National Research Council.
research organizations. Each of these participants has different
interests and responsibilities, and each is an integral part of this
cooperative research effort.
Research problem statements for the ACRP are solicited period- The Transportation Research Board of the National Academies, the National
Research Council, and the Federal Aviation Administration (sponsor of
ically but may be submitted to the TRB by anyone at any time. It is
the Airport Cooperative Research Program) do not endorse products or
the responsibility of the AOC to formulate the research program by
manufacturers. Trade or manufacturers' names appear herein solely because
identifying the highest priority projects and defining funding levels
they are considered essential to the clarity and completeness of the project
and expected products. reporting.
Once selected, each ACRP project is assigned to an expert panel,
appointed by the TRB. Panels include experienced practitioners and
research specialists; heavy emphasis is placed on including airport
professionals, the intended users of the research products. The panels
prepare project statements (requests for proposals), select contractors,
and provide technical guidance and counsel throughout the life of the Published reports of the
project. The process for developing research problem statements and
selecting research agencies has been used by TRB in managing coop- AIRPORT COOPERATIVE RESEARCH PROGRAM
erative research programs since 1962. As in other TRB activities, are available from:
ACRP project panels serve voluntarily without compensation.
Primary emphasis is placed on disseminating ACRP results to the Transportation Research Board
intended end-users of the research: airport operating agencies, service Business Office
500 Fifth Street, NW
providers, and suppliers. The ACRP produces a series of research Washington, DC 20001
reports for use by airport operators, local agencies, the FAA, and other
interested parties, and industry associations may arrange for work- and can be ordered through the Internet at
http://www.national-academies.org/trb/bookstore
shops, training aids, field visits, and other activities to ensure that
results are implemented by airport-industry practitioners. Printed in the United States of America
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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished schol-
ars engaged in scientific and engineering research, dedicated to the furtherance of science and technology
and to their use for the general welfare. On the authority of the charter granted to it by the Congress in
1863, the Academy has a mandate that requires it to advise the federal government on scientific and techni-
cal matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National Acad-
emy of Sciences,
The National as a parallel
Academy organization
of Sciences of outstanding
is a private, nonprofit,engineers. It is autonomous
self-perpetuating society of in its administration
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the furtherance the responsibility
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and to their use for the general welfare. On the authority of the charter granted to it by the Congress in programs
aimed the
1863, at meeting
Academy national needs, encourages
has a mandate education
that requires andthe
it to advise research,
federal and recognizes
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services of eminent members of appropriate professions in the examination of policy matters pertaining
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the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. William A. Wulf are chair and vice chair,
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than 5,000 engineers, scientists, and other transportation researchers and practitioners from the public and
private sectors and academia, all of whom contribute their expertise in the public interest. The program is
supported by state transportation departments, federal agencies including the component administrations of
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ACRP COMMITTEE FOR PROJECT 11-03 COOPERATIVE RESEARCH PROGRAMS STAFF
ROBERT J. REILLY, Director, Cooperative Research Programs
CHAIR CHRISTOPHER W. JENKS, Manager, ACRP
BURR STEWART EILEEN P. DELANEY, Director of Publications
Port of Seattle
ACRP SYNTHESIS STAFF
MEMBERS STEPHEN R. GODWIN, Director for Studies
GARY C. CATHEY and Special Programs
California Department of Transportation JON WILLIAMS, Manager, Synthesis Studies
KEVIN C. DOLLIOLE GAIL STABA, Senior Program Officer
LambertSt. Louis International Airport DON TIPPMAN, Editor
BERTA FERNANDEZ CHERYL Y. KEITH, Senior Program Assistant
Landrum & Brown
JULIE KENFIELD TOPIC PANEL
Carter & Burgess, Inc. GARY C. CATHEY, California Department of Transportation
CAROLYN MOTZ KEVIN C. DOLLIOLE, LambertSt. Louis International Airport
Hagerstown Regional Airport BERTA FERNANDEZ, Landrum & Brown
CHRISTINE GERENCHER, Transportation Research Board
FAA LIAISON JULIE KENFIELD, Carter & Burgess, Inc.
LORI LEHNARD FRANK N. LISLE, Transportation Research Board
CAROLYN MOTZ, Hagerstown Regional Airport
ACINORTH AMERICA LIAISON BURR STEWART, Port of Seattle
RICHARD MARCHI LORI LEHNARD, Federal Aviation Administration (Liaison)
RICHARD MARCHI, Airports Council InternationalNorth America
TRB LIAISON (Liaison)
CHRISTINE GERENCHER
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FOREWORD Airport administrators, engineers, and researchers often face problems for which infor-
By Staff mation already exists, either in documented form or as undocumented experience and prac-
Transportation tice. This information may be fragmented, scattered, and unevaluated. As a consequence,
Research Board full knowledge of what has been learned about a problem may not be brought to bear on its
solution. Costly research findings may go unused, valuable experience may be overlooked,
and due consideration may not be given to recommended practices for solving or alleviat-
ing the problem.
There is information on nearly every subject of concern to the airport industry. Much of
it derives from research or from the work of practitioners faced with problems in their day-
to-day work. To provide a systematic means for assembling and evaluating such useful in-
formation and to make it available to the entire airport community, the Airport Cooperative
Research Program authorized the Transportation Research Board to undertake a continu-
ing project. This project, ACRP Project 11-03, "Synthesis of Information Related to Air-
port Practices," searches out and synthesizes useful knowledge from all available sources
and prepares concise, documented reports on specific topics. Reports from this endeavor
constitute an ACRP report series, Synthesis of Airport Practice.
This synthesis series reports on current knowledge and practice, in a compact format,
without the detailed directions usually found in handbooks or design manuals. Each report
in the series provides a compendium of the best knowledge available on those measures
found to be the most successful in resolving specific problems.
PREFACE This synthesis study is intended to inform airport operators, stakeholders, and policy-
makers about alternative financing options and revenue sources currently available or that
could be available in the future in the United States. The report provides a brief overview
of common capital funding sources used by airport operators, a review of capital financing
mechanisms used by airports, descriptions of various revenue sources developed by airport
operators, and a review of privatization options available to U.S. airport operators.
Information used in this study was acquired through a review of the literature and inter-
views with airport operators and industry experts.
Cindy Nichol, Jacobs Consultancy, Burlingame, California, collected and synthesized
the information and wrote the report. The members of the topic panel are acknowledged on
the preceding page. This synthesis is an immediately useful document that records the prac-
tices that were acceptable within the limitations of the knowledge available at the time of
its preparation. As progress in research and practice continues, new knowledge will be
added to that now at hand.
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CONTENTS
1 SUMMARY
5 CHAPTER ONE INTRODUCTION
Purpose of Report, 5
Study Methodology, 5
Report Structure, 5
General Background on Airport Financial Operations, 6
13 CHAPTER TWO FINANCING MECHANISMS--AIRPORT PRACTICES
AND INNOVATIONS
Airport Access to Credit, 13
Types of Airport Bonds, 13
Other Forms of Airport Financing, 21
Leveraging Future Grants, 22
24 CHAPTER THREE REVENUE SOURCES--AIRPORT PRACTICES
AND INNOVATIONS
Airport Parking Revenue, 24
Rental Car Revenues, 26
Terminal Concessions, 27
Advertising Programs, 29
Commercial Development and Land Use, 30
Other Innovative Revenue Enhancement Concepts, 33
35 CHAPTER FOUR ALTERNATIVE WAYS OF DOING BUSINESS
Partial Privatization, 35
Full Privatization, 36
38 REFERENCES
39 BIBLIOGRAPHY
41 ACRONYMS
42 APPENDIX A STATE GRANTS AND LOANS FOR AVIATION
