Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
1 This synthesis, Attracting Investment at General Aviation Airports Through PublicâPrivate Partnerships, focuses on practical business applications that will make general aviation airport developments successful. Although general aviation airports have historically been funded by federal, state, and local entities, the private sector is increasingly playing a larger role. This involvement has ranged on a continuum from service and management con- tracts to singular projects on airports that involve leasing mechanisms to long-term leases and the whole-scale private development of general aviation airports. In an era of declining resources and increasingly scrutinized public expenditures, private-sector involvement is and will likely need to continue to play a larger role to fill an ongoing and increasing gap between the existing infrastructure and the infrastructure that is needed. Current business (ownership and operating) models of general aviation airports vary from those wholly owned by municipalities to those privately developed and owned but open to the public. Some urban areas have several private airports that play an important role in their regionâs aviation system. Other states are seeing an increasing number of airports enter into airport management contracts with private companies that offer not only management expertise but also capital development opportunities not heretofore available. This study focuses on the publicâprivate partnerships (PPPs) at general aviation airports in the United States over the past five years. For the purpose of this research, these partner ships are defined by the World Bank as long-term contracts between a private party and a govern- ment entity for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance (1). This synthesis is comprised of three key components: (1) a review of the current literature and state-of-the-practice for private participation at general aviation airports, (2) a summary of the results from an initial screening survey of general aviation airports and their privatization efforts, and (3) a summary from five selected case examples of general aviation airports that have undergone some level of partnership with a private-sector partner. The review of the literature elicited a few key findings. First, both large and mid- sized PPP deals have increased at commercial service airports. These deals, which in a few notable cases have involved the transfer of financing and revenue risk, suggest that the trend in the aviation industry largely follows that experienced in the U.S. highway transportation industry. While it has been unclear exactly the extent to which this trend has been occurring with general aviation airports specifically, a review of literature sug- gests that more state and municipal governments are increasingly expressing interest in exploring ways to transfer a larger share of the construction and operational risk of their assets to a private-sector partner in the hopes of attracting more infrastructure develop- ment and revenue. S U M M A R Y Attracting Investment at General Aviation Airports Through PublicâPrivate Partnerships
2 Attracting Investment at General Aviation Airports Through PublicâPrivate Partnerships One potential issue affecting how general aviation airports can attract more private investment, however, is the heavy reliance of general aviation airports on limited federal funding from FAA under the Airport Improvement Program (AIP). The associated grant assurances as well as the unique rules, regulations, and minimum standards associated with the airport operating environment make it different from other PPP arrangements in the transportation or real estate industries. The remaining major funding sources are from state and local tax revenue, and grant money. The relatively limited revenues and sources of money available to general aviation airports has meant that investment is short of what is typically available to larger, commercial service airports. On the basis of feedback received from the survey results, however, this trend may be changing, as general aviation airports become more creative at monetizing their existing assets. The review of literature highlighted the fact that most PPPs in aviation are focused on larger, commercial service airports. It also became clear that little has been written and published about general aviation airports and PPPs. The second component of this study, the screening survey portion, yielded a few key trends. Although this survey was not statistically representative of all general aviation air- ports, researchers were able to obtain results from airport managers in more than 15 states from all four major regions of the country. Similar to results that emerged during the litera- ture review, interest by general aviation airports in attracting private investment is increas- ing. However, reasons for why general aviation airport officials were considering PPPs, and the outcomes, varied. The primary survey results provided insight on why airports are pursuing PPPs and what benefits they are or hope to be receiving. This study established that airports are pursuing such partnerships for many reasons and are structuring them in many ways on a seemingly ad hoc basis. Many survey respondents noted that working with private partners to share risk had helped to increase project financing flexibility and in some cases helped the general aviation airport deliver projects on time and within the original scope and budget. Many airports across several states have turned to professional airport management com- panies in an effort to accomplish their goals. These goals include not only managing the facilities but also leveraging the expertise of these companies to increase activity and revenue as well as take advantage of the real estate management and capital development expertise. Because in many respects running an airport is about managing real estate, knowledge in that arena is paramount. During the course of this study, it became evident that many general aviation airport officialsâincluding some who were entering into such partnerships just this yearâwere new to PPPs. Innovative solutions and increased efficiencies can be gained while limited government flexibilities, the misperception of a private-sector takeover of a facility, and unforeseen challenges can be downsides. However, open communication between the stake- holders, transparency throughout the process, and a willingness of government in address- ing needs can help make such a project successful. Further study, of which specifics have been provided, could help provide additional guidance to airports looking to attract private investment to meet their needs. Much of this future research could be consolidated to comprise a guidebook for general aviation airports on developing PPPs to provide solutions to a number of challenges that they currently face.