Research Projects

Future of Airport Finances In Reserve

If ever there was a time to take a comprehensive look at all the line items in an airport's financial plan - now is that time. As new approaches/solutions to the post-COVID 19 travel experience are developed, many of them will come with upfront costs or long-term maintenance expenses. A deep dive into the various elements of an airport financial plan would be a useful tool for airport managers to use to determine financial feasibility for solutions.

Background (Describe the current situation or problem in the industry, and how your idea would address it.)

The current financial impact to airports from the COVID-19 pandemic will be long lasting. This project would provide ideas not just for pandemic recovery but for other situations where an airport foresees a financial impact such as recessions and loss of service by a carrier.

Objective (What is the desired product or result that will help the airport industry?)

The project would unpack the current financial plan and dedicate a chapter to new ideas for each component going forward. The goal would be a reference guide that would provide ideas not just for pandemic recovery but also for recessions and loss of airline service. For example, Debt service is a large line item for many airports - what are some measures that an airport can take to reduce debt service in the short and long term? Concessions - most airports are offering some relief from Minimum Annual Guarantee (MAG) payments but will MAG payments ever be the typical concessions revenue source? Cargo versus Passenger airlines - clearly the impact has been greater on passenger airlines but most airports don't really differentiate between the two types of airlines? Should this be a consideration?

Approach (Describe in general terms the steps you think are needed to achieve the objective.)

This would be a guidebook. A possible outline would be:

1. Overview of historic financing of airports

2. Expenses

a. Debt Service

b. O&M Expenses

3. Revenues

a. Airline Revenues - landing fees; terminal rentals; common use charges etc.

b. Non-Airline Revenues - parking, concessions, cargo

4. Other Innovative Ideas - this would update prior innovative discussions for the world as it exists today

Cost Estimate and Backup (Provide a cost estimate and support for how you arrived at the estimate.)

$175,000 - assuming that each section would require an industry expert including airport finance, concessions, development, legal and financial advisor. The research hours would be approximately 100 hours per topic plus expenses.

Idea No. 431