On December 15, Aviation Daily included a small news article noting that Passenger Facility Charge (PFC) collections totaled $71.5 billion between 1992, when collections first began, and November 30, 2009. In Fiscal Year 2010, PFCs are expected to raise $2.8 billion for needed airport improvements, based on FAA enplanement forecasts. Additionally, the article stated that the total costs of the landside projects that PFC collections will partially fund are $25.3 billion. Most of these landside projects—87.5% according to the Aviation Daily article—involve airport terminals. The article contrasted these landside project costs with the total costs of PFC-funded airside projects, noted to be $11.9 billion.
Unfortunately, the direct comparison of landside and airside project costs without any context can leave the reader with the misleading impression that airports are overinvesting in landside projects rather than addressing airside improvements. We thought it would be helpful to dig a bit deeper into the statistics presented in the article to clear up any possible misunderstanding.
The eligibility regulations for using PFC funds and Airport Improvement Program (AIP) grant money lead many airports to use their PFC collections to fund needed landside improvements. This is because FAA regulations governing the use of PFCs are less restrictive than those associated with AIP, because PFCs are viewed as “local money”. Accordingly, most airports use their AIP grant and entitlement funds to fund airside projects, reserving their PFC collections for landside projects, including terminal rehabilitation, expansion, or new construction. Thus, one would expect PFCs to be used more frequently and in greater amounts for terminal projects than for airside projects.
It is also worth noting that terminal improvement projects tend to be more complex—and costly—than comparable airside improvement projects. That just makes sense given the complexity of designing and building a modern terminal that complies with the myriad of building and fire codes, security regulations, and environmental rules. Additionally, the needs of both passengers and employees with disabilities must be taken into account.
Data on projects underway in late 2008, from the 2009 ACI-NA’s Capital Needs Survey, show similar figures. There were 73 airports that participated in the survey, evenly spread among large, medium and small hubs. These airports had a total of 295 airside projects under construction, at a price tag of $7.3 billion. There were also 195 landside projects underway, at a value of $11.8 billion.
If you aren’t familiar with this ACI-NA survey, it is the only comprehensive assessment of infrastructure needs for airports of all sizes throughout the United States. This is not a list of “airport wants” as some airlines have suggested, but an assessment of “committed projects” for which financing is secured as well as “uncommitted projects” which have been included in the master plan, airport layout plan, or capital plan and are essential to meet current or future air traffic growth and facility demand. In order for a project to be included in the survey, an airport must believe that airlines will support it or will not block it through the contractual approval process. Additionally, these are projects for which airports expect to obtain all environmental and other local approvals.
The figures for future projects, planned for 2009 – 2013, are shown below:
While the next ACI-NA Capital Needs Survey may show some reduction in planned projects, given the reduction in passenger and cargo traffic, two basic tenants remain: There is a need to modernize and expand airport infrastructure and terminal projects cost more than building runways, taxiways and aprons.
By Debby McElroy and Chris Oswald