General Aviation Airport Funding Strategies

1
General Aviation Airport Funding Strategies

• FAA Center of excellence for General Aviation
  Research (CGAR)
• Keith Bagot, Project ManagerMassoud Bazargan, PI

2
Overview

• GA airports will not be able to fund their
  planned development (Source GAO Testimony, 2003)
• How can GA airports attract funding?
• Are there any innovative financing techniques
  available for GA airports?

3
Overview
 
 
GA Airports Open to Public 4,508
                             
None-NPIAS GA Airports (Local Service
Airports) 1,950
NPIAS GA Airports Public Ownership
2,420 Private Ownership - 138

• GA airports included in National Plan of
  Integrated Airport System
• ? 10 based aircraft
• ? 20 miles from another NPIAS airport

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Overview (Cont.)
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Phase I

• Mailed to 2,288 GA airport managers from 8 FAA
  regions
• 588 competed questionnaires (25.7 response rate)

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Sample Characteristics
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Subsidized and Non-subsidized

• Operational Definitions
• Non-subsidized GA Airport - Airport with ability
  to generate adequate revenue to cover all normal
  expenses for its operation, administration, and
  maintenance, and for the local share of federal
  and/or state funded capital improvement projects
  (matching funds)
• Subsidized GA Airport - All others

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Subsidized or Not
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Percent of Non-Subsidized Airports by FAA Region
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Importance of Revenue Sources
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Phase II

• Analysis of best practices employed by managers
  of self-sustaining GA airports.
• Specific Revenue Generators examined
• Hangars
• Fuel
• Non-aeronautical revenues

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Process for Phase II

• 45 GA airport managers were interviewed.
• 6 European GA airport managers were also
  interviewed.

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Process for Phase II

• Designed a new questionnaire.
• Survey sent to 126 GA Airports Managers
• Received usable results from 66 respondents.

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Self-Sustaining Airports
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Airport Governance
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Locations of GA airports
17
Characteristics of real estate development near
the airport
18
New initiatives to increase revenue during the
past 10 years
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T-Hangars
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Number of T-hangars at GA Airports
21
Operation of T-Hangars at GA Airports
22
Views of GA Airport Managers on Outsourcing
T-Hangar Operations
23
Deposit required for a customer to be on the
T-hangar waiting list
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Corporate and Maintenance Hangars
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Corporate hangars at GA airports
26
Corporate hangar operation at GA airports
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Do you see a a strong need for corporate hangars
in the area around the airport?
28
Do you regularly evaluate hangars rental rate ?
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T-Hangar Construction
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Hangar Construction

• Becoming increasingly more expensive
• materials
• labor
• safety and environmental regulations at federal,
  state and local levels
• GA airport mangers typically not comfortable with
  outsourcing construction of hangars.

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Hangar Construction

• Construction of T-hangars recently eligible for
  AIP (Airport Improvement Program) lowest
  priority.
• Few states provide support for low priority
  projects (FL, CA, TX).

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Hangar Construction

• Holland SheltAir
• Full service FBO owns and operates corporate
  hangars and T-hangars in FL and NY.

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Hangar Construction

• Unique Example
• Each T-hangar 24,000/unit
• Decide to build 40 total cost of 960,000.
• FDOT provides up to 80 grant (20 matching
  from the airport)
• Airport share 192,000
• Developer steps in pays Airport share in return
  for a 30-year ground lease.
• Developer pays 7 for the FDOT share investment
  (53,760)

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Revenues and Expenses
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Economic Benefit of Third-Party Construction of
T-hangars

• Airport receives 72,926 from the airport
  investment fee and ground lease.
• Airports marketability increases due to new
  hangar facilities.
• Airport incurs no operational or maintenance
  expenses.
• At end of lease period, airport assumes control
  and collects all revenues for itself .

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Fueling
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Economic Benefits of Self-Service Fueling System

• Fuel sales reported as the second best source of
  revenue.
• Revenue generated through fuel sales and/or Fuel
  Flowage Fee (FFF).

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Fuel Sales at GA Airports(subsidized
non-subsidized)

• Majority of GA Airports handle fuel sales through
  one FBO

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Economic Benefits of Self-Service Fueling System

• Available 24 hours a day, 7 days a week
• Added convenience increases marketability of
  airport

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Availability and Operation of Self Service
Fueling System
Availability
Operation
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Should the Airport handle the operation of
fueling system?
42
Do you regularly adjust Fuel Flowage Fee?
43
Level of competition for fuel sales from adjacent
GA airports
44
Constraints to Installation of Self-Service
Fueling System

• Can be prohibitively expensive to purchase and
  install (150,000)
• Must have sufficient GA traffic to be
  economically feasible (minimum of approximately
  25,000 gallons sold per year)
• Maintenance, operations and depreciation costs
  must be taken into account

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Non-AeronauticalRevenue Sources
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Creative Land Use Development

• Business Parks
• Golf course
• Vehicle parking
• Car dealers
• Rental car agencies
• Campground/RV parking
• Agricultural Lease

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Creative Land Use Developments

• Mineral rights
• Field sports
• Special activities and events catering to both
  aviation and non-aeronautical interests (car
  shows, auto sales, expositions)

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Combined strategiesLocation
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Combined strategiesReal-Estate Development
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Combined strategiesT-Hangar competition
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Conclusion Recommendations

• No general strategy exists for all airports
• For many airports, financial self-sufficiency can
  be achieved sustained
• Trend of airport managers drifting rapidly from
  being expert in aviation issues toward marketing,
  finance, real estate development

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Conclusion Recommendations

• General and special educational programs in
  business and development can help the airport
  management professional to develop and exercise
  these skills.
• A general program and resources for information
  provided in the report.

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Conclusion Recommendations

• T-hangars and corporate hangars - highest source
  of revenue.
• Long waiting lists - evidence of demand
• Build more hangars - if comfortable with
  development
• Otherwise, consider private sector
• Re-adjust rents regularly
• Ask for deposits.

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Conclusion - recommendations

• Fuel sales second highest source of revenue
• Operate and manage fuel sales if volume is
  justified
• Re-adjust Fuel Flowage Fee regularly if possible
• Introduce self-service fueling system if volume
  is justified

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Thank YouQuestions Answers?