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Private Money Takes On Bigger Role in Airport Projects

Category: Business,Finance

Airport financing works somewhat differently than investment in public works projects. A government covers construction and some maintenance costs, but airports are expected to be self-sufficient otherwise and to find other sources of revenue.

As many as a third of the airports in the United States were privately owned before the Great Depression and the infusion of New Deal spending, according to Deborah Douglas, the curator of science and technology at the M.I.T. Museum who has studied airports between the world wars.

Wartime needs changed the dynamic.

“The underlying principle of airport operations, beginning with World War II, was that local governments should own and operate the airports, and the federal government should provide the capital for construction and some maintenance costs,” said Peter Kirsch, a partner at the law firm Kaplan, Kirsch and Rockwell who specializes in transportation.

Since then, Mr. Kirsch said, there has been an antipathy toward private ownership of, and investment in, public infrastructure. Local governments or airport authorities borrowed to pay for construction. But changes in the economy and in tax laws, he added, meant that “the advantage of public sector borrowing over private sector borrowing has narrowed.” Because two major government sources of financing for airports — facility fees and Airport Improvement Program grants — have remained at the same levels for years, the money does not go as far as it once did.

Short-term appropriations from Congress make it difficult for airport officials to plan long-term projects. Revenue from restaurants, stores, taxis, rental cars and parking is subject to less oversight. And when third parties maintain private terminals, airports and passengers reap benefits without incurring additional expense.

Prospective users of Paine Field Passenger Terminal approve of the arrangement. Minda Zetlin, a writer who lives about 15 miles northeast of the airport and nearly 50 miles north of Sea-Tac, said that traveling to the larger airport usually required her to use a car service, at an additional cost of $110 each way.

She said some of her neighbors traveled 65 miles to the airport in Bellingham, Wash., 20 miles from the Canadian border, rather than fight traffic into Seattle. “Sure, when there’s commercial service out of Everett we’ll look at that as an attractive alternative,” she wrote in an email.


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