Airport Experience News Fall 2022

Web 2022 Airport Fiance Exhibit 1 of 3

A Decline In Passenger Traf c During The Pandemic Has Caused Revenues For U.S. Airports To Plummet

US airports to plummet.

Airport revenue share, by hub size, %¹

Airline landing fees (cargo)

9

14

12

17

Airline terminal rents (hangars and cargo)

17

18

19

27

Passenger spend (eg, food and beverage, retail, parking, rental cars)

25

43

39

8

Passenger facility charges

31

Other ( xed-base operations revenue, fuel sales, land leases, other revenues)

41

12

14

13

16

14

12

Large

Medium

Small

Nonhub

¹ Figures may not sum to 100%, because of rounding. Source: McKinsey & Company, utilizing Federal Aviation Administration form 5100-127, 2019 data aggregate by airport type

advocated for years for an increase in the PFC cap, and that push will continue in the coming year. “There comes a time when you look over the horizon and realize there’s no way of getting where we need to go, absent some sort of adjustment to the PFC,” Bacon says. Unusual Blips Federal funding for airports has been anything but usual in recent years. In response to the devastation caused by the pandemic beginning in March 2020, Congress approved the 2020 Coronavirus Aid, Relief and Economic Security Act, which provide $10 billion for airports. The Coronavirus Response and Relief Supplementary Appropriation Act, passed at the end of 2020, included nearly $2 billion for airports. The money wasn’t for infrastructure, however. It was doled out to keep airports afloat during a catastrophic event for the industry, but it did allow some airports to continue infrastructure work that might otherwise have been tabled. The 2021 Bipartisan Infrastructure Law, on the other hand, included $15 billion for infrastructure

grants to commercial service, general aviation, and contract tower airports over five years along with $5 billion for a new airport terminal program and $5 billion for FAA facilities and equipment. For fiscal year 2022, $2.89 billion has been made available to U.S. airports. Finally, the FAA’s standard Airport Improvement Program provides more than $3.18 billion annually to airports, although the vast majority is designated for airside improvements and can’t be used for terminal projects. AAAE and ACI-NA say the overall federal funding falls far short of the needs faced by commercial airports in the United States. Compounding the issue is the fact that PFC revenues have been sharply reduced due to the lower passenger traffic experienced by airports in 2020 and 2021. The airport industry can look to the success it had in getting the pandemic prompted funding and use that model in its push for a higher PFC cap. Annie Russo, chief political and congressional strategy officer at ACI-NA, said at the trade group’s recent annual convention that it will seize on that success to push its agenda forward.

“One of the really important lessons that I think the industry learned [during the pandemic] and, quite honestly, the reason for the great success we had in receiving funds from the federal government was that we got the messaging right,” Russo said at the September conference. “It was easy and simple to understand…. Because we spent so long trying to explain airport financing and airport funding, members of Congress and senators, they really got it and they helped us. “We need to piggyback on that good work that we have done over the last few years, get our messages right…and take advantage of the political landscape in order to have success on that bill,” Russo added. That political landscape is challenging no matter which party is in power, but each scenario requires a different approach. “We really have to put everything we’re talking about in context of what the possibilities are and what the political landscape looks like post-election,” she said, noting that the messaging shifts depending on which party is in the majority. Bacon notes that a PFC cap increase is “never an easy lift for Congress but we’ll keep aggressively pursuing it.”

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