How Are Airports Financed?


Airports are multi-million dollar operations. Most U.S. airports are owned by state or local governments, but they still must operate like a business. Airports are required by the federal government to be as self-sustaining as possible.

 

Day-to-Day Operating Revenue


Aeronautical revenue

The airlines are the source of the aeronautical, or airside revenue.

Revenue from airlines includes:

  • Terminal rents – Based on the amount of space an airline uses inside the terminal.
  • Landing fees – A per plane charge, usually based on the weight of the aircraft.
  • Other charges – Specific fees for extra airport services (i.e. use of a jet bridge).


Non-Aeronautical revenue

Non-aeronautical, or landside, revenue are all the funds generated from all non-airlines sources. These other sources include:

  • Concessions – Rents paid by gift shops, restaurants, newsstands. Most concession contracts also require a concession to pay a percentage of its profits to the airport.
  • Parking – Fees for all airport-owned parking lots.
  • Advertising – Ads placed on airport walls, billboards and buses are a source of airport income.
  • Land rent – Excess airport land may be rented for golf courses, office buildings, hotels or farming.

 

Funding Airport Construction Projects


Federal Grants

The federal government recognizes that airports play a vital role in the national transportation network. Because of this role, the federal government pays out grants from the Airport Improvement Program (AIP).


Passenger Facility Charges

Passenger Facility Charges, or PFCs, are a fee collected by the airline on behalf of the airport and the fee is listed on the passenger’s ticket. PFCs have become a cornerstone of airport capital programs, having funded over $50 billion in airport development since their inception in 1990.


Bonds

Airports frequently turn to the capital markets to finance long-term construction projects. Because many airports are part of a state, county or local government, they have access to tax-exempt municipal bonds.


State and Local Grants

  • Many states provide funding for local airports through grants or other assistance.
  • These funds can come from specific taxes and fees such as fuel taxes or aircraft registration fees, or from general state revenues.
  • State or local funds can be a grant for a project.
  • State and local governments may also provide local dollars to match federal grants.

 

Compiled by A.J. Muldoon (amuldoon@aci-na.org),

Manager, Center for Policy and Regulatory Affairs

Need more information?

Financing Canada’s Airports 

For more detailed U.S. airport financing information on this web site. 

 

Also See: