Airport Ownership and Organization Flashcards
After World War II, the Federal Airport Act of 1946 transferred ownership of many surplus military airports to local municipalities through the use of
AP-4 agreements.
AP-4 agreements.
the precursor to the current Grant Assurances,
were promises made by municipalities that the airport would continue to be
operated and maintained.
What type of airport ownership is most common:
City ownership of airports represents approximately 33 percent of all U.S.
airports; 15 percent are County operated, 7 percent are State operated. Port
Authority ownership represents 9 percent of the total airports, Airport Authority’s
represent 30 percent, and the remaining 6 percent are operated with other
agreements such as inter-city contracts (Dallas/Ft. Worth) or by a special tax
district.3
The transfer of airports from federal control to the states and municipalities
resulted in
the predominant form of airport ownership by municipality (city or
county) or authority. Within the municipality and airport authority structures,
numerous organizational variations exist.
Operating an airport is considered to be a \_\_\_\_\_\_\_\_\_\_\_\_\_ function of government, as compared with the operation of a government agency for redistributive (social or welfare) or protective (police or fire) purposes.
proprietary
function
The term
proprietary means to act as
a private enterprise.
In operating an airport, a
governing body may not necessarily be immune from
all state or local tort laws,
unless it is specifically granted such immunity
An airport is generally immune
when acting in its governmental capacity, but is not immune when
acting in its
businesslike or enterprise operations.
A disadvantage of operating an airport by a municipality is that the policy-makers
are often very unfamiliar with
the operation of an airport
An option for a
municipality in cases where policy-makers
are unfamiliar with the operation of an airport. is to create an
Advisory Board to review requests
from airport staff and prepare action recommendations for the Mayor or Council.
When the Airport Development and Aid Program
(ADAP) was formulated in 1970, federal grants-in-aid and planning grants were
restricted to
publicly owned airports. In addition to the desire to qualify for
federal funding, many municipalities have chosen to continue to operate the
airport publicly as a matter of community pride and economic development
Some
states and municipalities recognized the need for a focused effort and expertise in
operating the airport and chose to establish
airport authorities or commissions.
Both structures are political subdivisions of the state.
Airport Authorities are
independent, public agencies created by state legislation. Once created, they add another layer of government.
variety of organizational
forms exist and the specific powers and responsibilities of any given authority are
established in its
enabling legislation.
Some airport authorities have the power
only to make daily operating policies, while others have
tax levy capability or the
power of eminent domain.
Eminent domain is the power to
acquire property for
the public good and is one of the rights a state can convey to local governments or
authorities
Generally, it is up to the Airport Executive to ensure their board
members, whether they are municipalities, authorities or advisory members are
educated on airport operational issues and management challenges.
The reasons municipalities create airport authorities include
Airport market or service areas have outgrown the political jurisdiction
whose responsibility the airport entails. In some cases, there is
considerable, actual, or potential tax liability to a rather limited area. In
these cases, the creation of an authority to spread the potential or actual
tax support for the airport might be recommended. By spreading the tax
base of support for the airport, more equitable treatment of the individual
taxpayer can result and, in most cases, the taxpayers supporting the airport
more closely match the actual users of the facility. This argument is less
valid when the airport is completely self-sustained by its own revenues.
Authority control of an airport allows for the governing board to
concentrate and specialize on airport business matters rather than on
general social or community issues not related to airports.
Efficient operation and economies-of-scale can be obtained when several
political jurisdictions, each with separate airport responsibilities, choose to
combine these responsibilities under one governing board. This has been
done quite successfully in many areas of the country (such as The Port
Authority of New York and New Jersey [PANYNJ]). Normally, the
staff required by an airport authority can be quite small compared with the
personnel requirements of a city or county government. This factor
generally results in better coordination within the airport management
team.
Authorities can provide the on-scene decision makers that result in less
political impact on the business of running the airport.
Authorities can provide multiple jurisdictions that may benefit from or be
impacted by the airport with representation in the airport’s operation and
development.
Authorities can come into existence in a variety of ways. Some authorities are
established to operate a single airport while others are established to
operate a
system of airports, such as the Metropolitan Washington Airports Authority
(MWAA), which operates both Washington/Dulles International Airport and
Ronald Reagan Washington National Airport
A port authority is a special type of legally chartered institution that generally has
the same status as a public corporation, but
that in addition to the airport, operate
other types of public facilities such as harbors, toll roads, rail, or other public
transportation systems, such as the PANYNJ
The advantage of an airport being municipally owned is
that the airport administration has
access to the resources of other city or county
departments. These resources may exceed what the airport’s administration could
justify if it operated on a stand-alone basis. Having such access reduces the
requirement of the airport department to provide duplicate services, such as
personnel, finance, or police.
The municipal government also has the power to tax
and issue
government bonds to aid in the operation of an airport
A disadvantage of a municipally owned airport is that in times of financial
constraints, the airport is often viewed as
a liability or suffers corresponding
budget reductions or personnel restrictions (such as mandatory furlough days) as
other departments in the local government. Airports are also competing for the
same attention and leadership consideration as other departments or divisions
within the municipal government.
To overcome the lack of leadership focus, municipalities often create
airport
commissions. Commissions can have the same responsibilities and stature as
airport authorities. Airport commissions are generally established to allow for focused attentionand expertise to be applied in operating the airport by appointing individuals to
represent the city or county. This can be either a benefit or a drawback because
members of commissions are normally political appointees who are subject to
positive and negative aspects of political maneuvering.
The creation of an airport or
port authority is often viewed
as a way to provide the
advantage of focused
leadership and specialized
attention to a significant
community asset. They often help to insulate the management and operation of
the airport from political impact. they can serve a metropolitan
community better through shared representation or equitable taxation not
normally available due to political boundaries or jurisdiction. Authorities can also provide for a more business focused efficient operation and economy of scale. The latter two reasons represent a positive vision for helping an airport to grow or
to be responsive to the needs of a whole region.
there has been a trend toward the establishment of more
airport authorities over
the last fifty years.
The power and effectiveness of an airport or port authority can often be assessed
by determining the answer to three questions:
(1) Who controls the appointments
to the authority’s governing body? (2) Does the authority have total control over
its budget, contracts, and personnel practices? and (3) Does the authority have the
power of eminent domain and/or the power to levy taxes? Answers to these
questions indicate of the authority’s ability to operate independently, to share
power with another entity, or to act as another layer of bureaucracy.
The disadvantage of airport or port authorities is that
resources and finances may
not be readily available in the quantities or level necessary to provide support to
the airport.
Municipalities often have larger
resource and funding wells to tap into
to support a variety of needs.
Airport authorities are often formed as a way to
divest a municipality or state from
the liability of operating the airport, the
pressure of public scrutiny and complaints, or the need for large amounts of
capital investment.
While well-managed and financially sound airports are generally not subject to the creation of an authority by a municipality or state 18 Airports can operate as standalone enterprises because their revenues and expenses are related in a businesslike context; therefore, user fees can be charged for services rendered. If the airport department is treated differently, it will likely suffer strained relations with the other city/county departments (which, is another reason airport authorities are created). because those governing bodies wish to retain control of the positive asset,
local
politics can still affect a change either to or from an Authority.
While some airports are operated directly by States, these are
the exception.
airports operate in many different ways
from a traditional municipal
service or private business.
Airports are distinctly different from traditional municipal operations. Airports
can operate as stand-alone enterprises because
their revenues and expenses are
related in a businesslike context; therefore, user fees can be charged for services
rendered.
If the airport department (as part of a municipality) is
treated differently, it will
likely suffer
strained relations with the other city/county departments (which, is another reason airport authorities are created).
While airports can operate as an enterprise and make decisions similar to a private
business, there are several distinctions between a publicly operated airport and a
private corporation. Airports often receive substantial
government subsidiesG in
the form of entitlement money, State and local funding, FAA Airport
Improvement Program grants, or Congressional earmarks.
Municipalities and Authorities can often issue bonds and provide
tax-exempt financing for airport
projects.
Public airports can also make decisions that maximize community
benefit, even though the decision may not be
supported by the economic needs of
the airport
Due to the nature of how airports were constructed and developed in the U.S.,
virtually all commercial service and general aviation airports are operated by
a
governmental entity. Private entities however are actively involved in US airport
operations and development,14 and in some cases, management.
According to
Wells and Young, authors of Airport Planning and Management: Privatization refers to the
shifting of government functions and
responsibilities, in whole or in part, to the private sector. The most
extensive privatizations involve the sale or lease of public assets
Airport privatization is the concept of shifting government functions to
private
enterprise. The concept gained traction in the 1980s and 1990s and in 1996 the
FAA initiated a pilot program to test the concept.
Typically, at least 90 percent of employees at commercial service airports work
for private companies (airlines, concessionaires, Fixed-Base Operators (FBO),
maintenance companies, contractors, etc.). Numerous attempts to turn over certain
areas of
airport management to private entities have been made
Privatization is already prevalent on U.S. airports in various forms. While airports
are large employers, most of the employees work for private companies located
on the airport, not the airport itself. Additionally, private companies produce most
of the
revenue generated at airports.
In the United States, airports
have had varying levels of
success and failure with
privatization.
The privatization or other sale of airport property is discouraged and hindered by
a series of federal statutory requirements identified in
Grant Assurances.
Grant
Assurances specify the use of airport revenue,
fair and reasonable fees for airport
users, and the disposition of airport property and other policies incorporated in
federal grant agreements.
Airport privatization has also not been well supported in
the U.S. A 2004 FAA Report to Congress described that communities commonly
prefer not ceding control of an airport to
a private entity.
