Financial Management
1. Airport Expenses
a. Operations and Maintenance Expenses (O&M)
i. Costs that occur on a regular basis
1. Airfield
a. Costs associated with
i. Runways
ii. Taxiways
iii.
Ramp areas
iv. Safety areas
v.
Lighting systems
2. Terminal
a. Costs associated with
i. Buildings
ii. Landscaping
iii.
Parking facilities
iv. Utilities inside terminal
3. Other facilities
a. Costs associated with
i. Hangars
ii. Cargo facilities
iii.
Other buildings
4. Administrative
a. Costs associated with
i. Payroll
ii. Office Supplies
5. Non-operating
a. Costs that are not directly related to the O&M of the airport
b. Examples include:
i. Loans, notes, or debts
ii. Insurance
1. Basic airport premises liability
2. Aircraft accident liability
3. Sale of product
b. Capital Improvement Expenses
i. Significant periodic expenses that contribute to the infrastructure of the
airport
ii.
Those expenses for airport improvements such as
1. Terminal expansion
2. Runway extensions
c. Airport Sources of Revenue
Financial Management
i.
ii.
Categories or Sources of Revenue
1. Airfield
a. Revenue generated by
i. Landing fees
ii. Parking charges
iii.
Fuel flowage
2. Terminal concession
a. Revenue generated by
i. Restaurants
ii. Travel services
iii.
Specialty shops
iv. Personal services
v.
Advertising
vi. Vehicle parking
vii. Hotels
3. Airline leased areas
a. Revenue generated through the lease:
i. Office areas
ii. Ticket counter space
iii.
Baggage areas
b. Types of lease agreements with airlines
i. Residual cost approach air carriers agree to pay any
airport operating costs not covered by other sources
of revenue
ii. The compensatory cost approach-airport assumes
all risks of operating the airport
4. Other leased areas
a. Revenue generated by
i. Freight forwarder areas
ii. FBO facilities
iii.
Industrial businesses
b. Prevenue generated by interest earned on government
investments
5. Non-operating revenues
Sources of Airport Funding
1. Federal Grants
a. 1970- Airport and Airway Development Act trust fund for
airport improvements
b. 1982- Airport Improvement Program (AIP) replaces ADAP
Financial Management
c. Airport Improvement Program provides grants for the
planning and development of public-use airports and must
be justified by aviation demand
d. Percentage of money covering eligible project costs
i. Large and Medium Airports receive 75%
ii. Small, Non-Hub, GA airports receive 95%
1. AIP
a. Airport Improvement Program
b. Funds improvement projects related
to enhancing
i. Safety
ii. Capacity
iii.
Security
iv.
Environmental Concerns
c. Airport sponsors who accept grant
offers are also accepting conditions
and obligations associated with grans
assurances
2. PFC
a. Passenger Facility Charges
b. 1990- Aviation Safety and Capacity
Expansion Act allowed airports to
begin imposing charges on
passengers called PFCs
c. Current charges are up to $4.50 for
every enplaned passenger at
commercial airports
d. Fees are sued to fund FAA-approved
projects that enhance safety, security,
or capacity; reduce noise; or increase
air carrier competition
2. State Grants
a. Funded by general state taxes and user fees on
transportation-related financing
b. This money can be used as either a supplement or as
primary funding
3. Bonds
a. Bond financing is similar to taking out lands
b. Airport, state, or local government sell bonds to citizens to
use for improvement projects
Financial Management
c. Two common types of bonds
i. General Obligation Bonds (GOB)
1. Issued by the state or local municipality for
financing large projects
ii. General Airport Revenue Bond
1. Issued by state or local government to fund
revenue-generating projects
4. Private Investment
a. Money obtained from a private entity
b. Money can be used for
i. Parking lots
ii. Car rental facilities
iii.
Other areas outside the airfield