Preparing Your Airport for Electric Aircraft and Hydrogen Technologies (2022)

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39   C H A P T E R   5 5.1 Economic Aspects and Policy Considerations The primary financial aspects associated with integrating electric aviation will be the cost of meeting new facility requirements imposed by electric aviation, the applicability of and impacts on federal funding sources, and the potential impacts on regional economies that could be brought about by electric aviation. Short-term impacts would stem primarily from readying airports to support electric aircraft operations and evaluating potential avenues for federal funding or state green grants during this time period. New revenues could come from user fees on the chargers. In the longer term, impacts would result from the growth of electric aviation among the local aviation operations and the expansion of air service connectivity. Both impacts will result from the maturation of electric aircraft technologies and air carriers’ full realization of the cost-savings potential of electric aviation over conventional platforms. Integration Costs Perhaps the most important and immediate factor to consider would be the costs associated with integrating electric aircraft operations into the airport ecosystem. Purchasing and installing electric aircraft charging systems would be the leading costs. The base components of these costs would be the per-unit cost of the chargers themselves. The estimate in Figure 15 is scaled to a 120-kW charger based on the estimated purchase price of electric bus chargers, which is the most relevant proxy currently on the market. This price point is expected to vary widely based on the power level and pace of charging. For example, Pipistrel developed and sells a 15-kW, $40,000 charging system to support its Alpha Electro electric trainer aircraft. Installation costs would be the second and perhaps larger component of aircraft charger costs. Electric equipment (e.g., cabling, transformers, switchboards, fuse boxes), construction and materials (e.g., concrete, trenching, boring, hardware), and labor would be the primary costs. The power requirements of the charger unit would be a driver of installation costs because these requirements would dictate the capabilities of the supporting electrical equipment. The place- ment of charger equipment would be another factor that airport planners must consider because it would influence installation costs. Beyond the immediate costs of purchasing and installing charging equipment, the integra- tion of electric aviation could require some airports to upgrade their overall power supply and connection to the electric grid. Costs, which would vary widely from airport to airport based on current capabilities and the scale of required upgrades, could prove to be cost-prohibitive for smaller airports. Airport planners should develop an airport energy strategy and plan to account for aircraft electrification as well as other future electrification projects. Economic Impact

40 Preparing Your Airport for Electric Aircraft and Hydrogen Technologies A final potential cost to airports would be the installation of an on-site power generation such as a microgrid. Although not all airports would choose to take this path, many have decided that the added costs would be worth the increased operational resilience and reduced reliance on power grids. Costs associated with installing these systems can vary widely—from $250,000 for small systems up to $100 million for larger multimode systems. The generation component of the system typically accounts for most of the cost. Redwood Coast—Humboldt County Airport in California— and several other local facilities, including a U.S. Coast Guard air station—is working to install a 2.3 MW solar microgrid for approximately $5 million to support airport electricity demand. Sources of Funding The final factor that airport practitioners must appropriately plan for is the funding and ownership of aircraft charging systems. Currently, it is largely unclear who would pay to install aircraft chargers. Funding could come through federal grant money, airline investment, private investment, or directly from airport funds. Because airlines are likely to be a driving force for installing charging facilities, they could prove to be viable partners for funding and managing charging facilities in a private-public partnership context. Existing FBOs could also be likely partners because forward-looking firms could seek to protect their operations and ensure they are prepared for the growth of electric aircraft operations. A primary source of federal grant funding for airport infrastructure planning and develop- ment projects is the FAA’s Airport Improvement Program (AIP), funding for which is allocated annually from the Airport and Airway Trust Fund (AATF), which in turn is funded by collecting various aviation excise taxes. Passenger tickets, cargo fare, the use of facilities by international airlines, and fuel sales are among the taxed items. Under the AIP, large and medium primary- hub airports can expect grants to cover 75 to 80 percent of eligible costs, while small, reliever, and general aviation airports can expect 90 to 95 percent coverage. Figure 15. Estimated infrastructure costs associated with electric aircraft are within historical funding capabilities of the FAA’s Voluntary Airport Low Emissions (VALE) Program.

Economic Impact 41   e FAA’s VALE Program was established to encourage airport sponsors to implement clean technology projects that improve air quality. While it is targeted primarily at commercial airports in areas that have not maintained National Ambient Air Quality Standards (NAAQS), this program has provided funding for projects such as gate electrication, eGSE, and solar projects. Under this program, 75 to 90 percent of a project’s eligible costs could be reimbursable (Figure 16). Eligible VALE Program projects can be funded through the AIP, or through the passenger facility charge (PFC) program, which collects fees from passengers for use of commercial air- ports controlled by public agencies. e VALE Program has provided an average of $15 million in grants funded per year since 2005, with state programs providing matching funds totaling an additional $4 million per year. As of today, electric aircra projects (and especially charging stations) are not eligible for funding through the FAA’s AIP. It is not clear either if there is a case for the VALE Program under current rules because funding would require justifying that these electric chargers would signicantly reduce emissions directly linked or attributed to the airport activity. Making electric aircra charging infrastructure projects eligible for funding would require a change of policy from the FAA. Rationales that could motivate this change include supporting environmentally friendly federal policies and initiatives on clean air and climate change and ensuring the continued accessibility of the NAS to aviation users if electric aircra successfully penetrate the market—a success that, in return, depends in part on the availability of chargers. It is likely that the introduction of electric aviation would have a growing impact on the tax revenues from fuel sales. ose eects that occur would likely stem from the long-term growth of electric and hybrid-electric aviation and the corresponding decrease in fuel consumption and purchases in the very long term (beyond 2040). While most funding for the AATF comes from passenger fees, revenue from aviation fuel taxes made up 4 percent of the fund’s total excise Figure 16. The VALE Program funds projects that reduce on-airport emissions but has historically focused on gate electrication and eGSE.

42 Preparing Your Airport for Electric Aircraft and Hydrogen Technologies tax revenue in 2018. Reductions in fuel tax, while not significant at the beginning, could affect funding availability for some projects or lead to increases in passenger fees to compensate, which could adversely affect aviation ridership. Ownership Model In addition to evaluating funding opportunities, it would be important that airports determine suitable ownership and usage models for charging systems. Airports could seek to maintain direct ownership of charging infrastructure and charge airlines and private owners’ fees for usage. However, this approach could have significant long-term impacts on airport FBOs. The growing use of electric aircraft could drive down fuel sales revenues, and airport ownership of charging facilities could limit FBOs’ access to new revenue streams. A likely approach that could address these impacts would resemble the current structure of fueling operations at many airports. FBOs would provide aircraft charging services to airlines and private owners and pass a portion of the revenue to the host airport. In cases where airlines help fund the installation and operation of aircraft chargers, it would be important that airport practitioners ensure equal access to all airlines to prevent a monopoly as already specified in today’s grant assurances. One question to address would be “Can aircraft owners and operators self-service their own aircraft and charge their batteries with their own equipment?”—a question that arose on aircraft fueling over safety and environmental concerns. Unlike with fueling, preventing this might violate the FAA Grant Assurance 22(f) on Economic Nondiscrimination that specifies “a sponsor will not exercise or grant any right or privilege which operates to prevent any person, firm, or corpora- tion operating aircraft on the airport from performing any services on its own aircraft with its own employees (including, but not limited to, maintenance, repair, and fueling) that it may choose to perform.” Also, several states have laws that regulate “utility submetering,” which is defined as the imple- mentation of meter systems that allow the operator or owner of a building or facility to bill tenants for individual utility usage through the installation of additional meters behind a utility meter. Some of these laws could prevent airports and states from charging an additional fee on electricity for aviation purposes. If airports and states decide to establish such taxes, they might have to restrict the use of the revenues to aviation and aeronautical purposes to prevent money diversion and other conflicts with FAA rules. Impact on Aircraft Fueling Services Until electric aircraft adoption reaches a point of critical mass, hydrocarbon-powered aircraft will remain the primary means of powered flight and represent most of the active commercial and privately owned aircraft. Estimates indicate that electric aircraft could account for 4 percent of all active aircraft by 2030; thus, aircraft fueling will remain a central service to the airport eco- system. Airports, FBOs, and airlines will continue to require fueling equipment, infrastructure, and personnel both in the short- and medium-term timeframes. The primary impacts are expected in the long term beyond 2030. As the prevalence of electric aircraft grows, airports, FBOs, and fueling service providers could begin to experience reduced revenue from aircraft fueling operations. Fueling revenues—in the form of sales revenue, flowage fees, and retained fuel taxes—represent a large portion of airports’ non-passenger aeronautical revenues, making up about 18 percent (a total of $418 million) in 2018. Additionally, at many airports, FBOs are the primary fueling service provider, collecting revenue from airlines and private operators and passing a portion through to the host airport.

Economic Impact 43   At many airports, FBOs rely heavily on the revenue stream of providing fuel for business, commercial, and general aviation. Due to the long-term nature of these impacts, airports and service providers should develop approaches to offsetting lost airport revenue and maintaining profitable relationships. The business model of electric charging stations, and the regulation of aircraft battery charging at airports, might influence the future of these stakeholders. The most critical situation might be if the portion of e-aircraft became so significant that it would no longer be profitable to offer fueling services to the rest of the fleet at some airports. 5.2 Economic Impact to Regional Gross Domestic Product (GDP) Long-term economic impacts of electric aviation are expected to stem from an ongoing evo- lution of U.S. air service connectivity. As electric aviation proliferates throughout commercial air operations, the economic benefits could enable regional air carriers to open new routes and expand into underserved regions. Beyond the immediate impact of increasing revenues at added airports, expansion to new destinations could serve to stimulate local economies through the following impacts: • Direct impacts create new jobs and spending at airports due to the additional air service activity, which includes contributions from expansion in airlines, retail and in-airport services, food and beverage, airport security and passenger screening, and maintenance, repair, and overhaul (MRO) providers. • Indirect impacts create jobs and spending for off-airport firms that support on-premise airport activities such as downstream food and catering wholesalers that deliver to airports, electricity generation for chargers and grid access, professional services firms (e.g., accounting, legal counsel, analytics, and consulting) that deliver to on-premise airlines and MRO providers, and tourism and travel-booking activity. • Induced impacts create business stemming from enplaned passengers spending their incomes at local businesses (e.g., health care, restaurants, hotels, auto rental, and local taxi services). In addition to affecting local businesses, expanded air service connectivity could enable afford- able air commuting and regional air mobility options and, at some point, attract new residents who work in major metropolitan areas but wish to reside elsewhere. For example, a regional airport such as Willard Airport in Urbana-Champaign, Illinois, could expand commuter aircraft service to five major cities within 250 miles (Figure 17). 5.3 Case Study: Washington Electric Aircraft Feasibility Study (Economic Impact) The Washington State Department of Transportation (WSDOT) put together an electric air- craft feasibility study that addressed the economic impact of electric aircraft on the state of Washington. The study provided a framework for quantifying economic impacts that can be adjusted as data become available. The framework indicated that the total economic impact is the sum of direct and indirect incomes that are expressed in terms of job, labor income, value- added, and business revenues with the aid of multipliers that are generated to quantify how different economic measures flow. Figure 18 shows the connection between the direct/indirect impact, multiplier, and economic measures. Including these multiplier effects, airports (excluding Seattle-Tacoma International Air- port) generate over 255,000 jobs in Washington state, $19 billion in labor income, and nearly $85 billion in business revenue. The multipliers in the study can also be used to calculate the

44 Preparing Your Airport for Electric Aircraft and Hydrogen Technologies Figure 17. For regional airports, electric aircraft could increase net revenue through opening new routes. Example of Willard Airport in Urbana-Champaign is shown (Champaign County Economic Development Corporation). Figure 18. Economic impact and measures. Source: EBP US, 2020, Kimley-Horn AIES 2020. Supplier Sales and Re-spending of Worker Income

Economic Impact 45   downstream effects on the economy as money related to aviation cycles through the economy due to growth created by electric aircraft. According to the study, electric aircraft have the potential to significantly increase flight activity and encourage growth on and off airports that will support jobs and create business revenues as well for the state of Washington in the following ways: • Reduction in time and costs for people and goods to travel, particularly over short and congested routes, would aid in the creation of more business activities and jobs. • Reduction in travel cost would also enable the connection between the rural areas in the state and the employment centers along the I-5 corridor. • Also, while the operation and maintenance of electric and hybrid-electric would require many of the same labor and skills needed to operate and maintain conventional aircraft, the aviation industry workforce will witness some variation in employment and skills needed to operate and maintain electric aircraft, and more jobs would be created.