The Future of Airport Finance (2024)

Breakout Sessions

Facilitators

Group 1

Kevin Kone, Managing Director, Finance, and Acting Airport Controller, San Francisco International Airport

Jim Bennett, Principal, Paslay Group

Group 2

Mukesh (Mookie) Patel, Airport Chief Officer, Business and Finance, Austin–Bergstrom International Airport

Arturo Garcia, Chief Operating Officer, AvPorts

Group 3

Chris Wimsatt, Deputy Director, Airport Finance and Administration, Sacramento County Department of Airports

Ian Sample, Associate, Steer Group

Group 4

Tatiana Starostina, Chief Financial Officer, Los Angeles World Airports

Overview

The objective of the breakout sessions was to provide event participants an opportunity to have more in-depth dialogue with industry experts and peers on the various topics discussed throughout the day. Each discussion group was led by one or two facilitators who posed questions to start the conversation, kept the group engaged, and directed the discussion according to the participants’ interests, including identifying future research ideas and questions and ideas for the hot topics session on Day 2. The breakout sessions were 45 minutes, followed by short summaries of the discussion from each facilitator.

Detailed Summary of Discussions and Key Points

The key ideas and discussion topics covered in each breakout group are summarized in this section.

Group 1

• Group 1 discussed the issue of ticket fares going up even though a recession is forthcoming and noted the disconnect between travel patterns and economic forecasts. The discussion included whether leisure travel can make up for the reduction in business travel and, if so, whether this model is sustainable and whether airports should continue building gates to accommodate the growth.

• The group also discussed the impact of federal government provision of funding during COVID, what happens if there is no government bailout during the next crisis, and how airports can prepare for that situation—specifically, how airports can replace infrastructure with unstable revenue sources.
• The group discussed new ways to monetize revenue (e.g., monetizing airports as a digital asset, naming and sponsorships).
• The group also discussed concerns with workforce development, notably, how to attract and retain airport staff and airline staff, including ground crews. The group’s members agreed that efforts are needed to get people interested in aviation and in pursuing an airport career at a much earlier age.

Group 2

• Group 2 discussed how U.S. and European airport governances are different. For example, the financial options are different, and risk- and reward-sharing are based on different environments.
• The group discussed the possibility that legacy carriers are becoming too big to fail. The conversation addressed the legacy air carrier model and the impact of ultra-low-cost carriers on business models.
• This group also discussed challenges and potential opportunities regarding different financial tools, how to fund big-ticket items, and dependency on parking revenue.

Group 3

• Group 3 discussed a research need for information on full cost recovery—what airports would need to charge airlines and passengers to pay for all the needs that had been identified.
• The discussion included thoughts on whether a shared service model would work for a system of small airports. Smaller airports have a difficult time staffing up for projects and often do not have the necessary workforce capacity to do so.
• Another topic raised was the idea of an airport infrastructure bank. Is there a model of an infrastructure bank that can work for airports across the country to help bridge financing issues?
• The group discussed the need for a more holistic study on alternative management options for airports to operate different types of amenities (FBOs, etc., to capture this revenue).
• Group members raised the issue of the current regulatory system being too restrictive. Specifically, the amortization terms are challenging for airports. Some of the largest recent airport projects have been led by private companies, particularly at JFK International Airport (JFK) or LAX. Participants noted that ACRP has looked at alternative financing before, but continued thought and research on alternative financing and delivery are needed.

Group 4

• Group 4 discussed a need for an ACRP synthesis to inventory the practices and actions that airports are taking to address funding needs and to identify which practices are specific to their local environment and which can be implemented by airports in other areas.
• The industry needs a guidebook on ESG reporting.
• Group members discussed new concession models and more proprietor-centric strategies, such as what Greenville–Spartanburg International Airport (GSP) is doing with a stadium-like concessions model.
• The topic of infrastructure lifespan was raised: How will airport practitioners ensure that projects built today with current dollars will meet needs 50–75 years in the future? Infrastructure funding mechanisms such as the U.S. Department of Transportation’s Transportation Infrastructure Finance and Innovation Act (TIFIA) program, were noted as an example. Not all airport projects are eligible, but some, such as terminal buildings, are. Funding projects to be priced right without further driving increased costs or spiked costs is a challenge, but the group acknowledged the need to continue building, or the industry would have capacity problems. Another challenge is that municipal bonds do not go beyond 35 years; there are no buyers.
• The group also discussed the industry’s net-zero carbon goals and the investments needed to achieve those goals. Airlines are approaching this in different ways. ACRP could examine partnerships or incentives for airport–airline cooperation toward the aspirational net-zero goal in 2050, that is, how airports and airlines can come together to make investments that make contributions to lowering GHG emissions.
• The group also discussed the possibility of charging differential rates based on environmental externalities. There are different approaches in Europe and the United States to addressing this problem.