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Airport Finance & Admin > Airport Ownership, Guidance & Organization > Flashcards

Airport Ownership, Guidance & Organization Flashcards

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1
Q

Who originally owned most US airports and for what reason?

A

Constructed by the US Gov’t for mail carriage or military use.

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2
Q

When and how were many airports transferred to civilian ownership by local municipalities?

A

Federal Airport Act of 1946 via AP-4 Agreements (precursor to Grant Assurances)

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3
Q

What was the purpose of AP-4 Agreements?

A

Promises that the airport would be continuously maintained and operated.

Normally only a local gov’t unit can make such a promise

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4
Q

Name four different ways a local gov’t will operate and maintain an airport.

A
  1. Dep’t or Division
  2. Authority
  3. Commission
  4. Special District
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5
Q

What percentages of airport ownership are represented by each gov’t unit?

A 
Cities - 33%
Counties -15%
States - 7%
Airport Authorities - 30%
Inter-city, special tax districts, etc. - 6%
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6
Q

Airports are operated as what type of gov’t function?

A

Proprietary

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7
Q

What three types of gov’t functions are there?

A
  1. Proprietary - private enterprise (airports)
  2. Protective - police or fire services
  3. Redistributive - social or welfare programs
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8
Q

Compared to most gov’t agencies, what legal disadvantage do airports operate under?

A

Unless granted specific immunity, airports may be open to state or local tort law.

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9
Q

Depending on organizational structure or success of operation, the Airport Executive may directly report to a:

A
  • Mayor or County Executive
  • Public Works Dir or City Mgr
  • County or City Atty.
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10
Q

What problem must most airport executives cope with regarding those they report to?

A

Generally very unfamiliar with airport operations.

Advisory Boards often created in response

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11
Q
  1. What local gov’t entities have been created to provide focused expertise in airport ops?
  2. Who has authority to form the above referenced agencies?
A

Airport Authorities and Commissions

State legislation creates authorities, whereas commissions are formed and overseen by local gov’t.

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12
Q

Provide three reasons why many municipalities desire to operate airports.

A
  1. Federal Funding

To ensure qualification for federal funding under Airport Dev & Aid Program (ADAP) of 1970, which is restricted to publically owned airports.

  1. Community Pride
  2. Economic Development
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13
Q

Describe an Airport Authority.

A

An Airport Authority is an independent public agency created by state legislation.

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14
Q

Describe extremes of power Airport Authorities have.

A

Can be limited in scope to daily operational policies or be able to implement tax levies and exercise eminent domain.

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15
Q

For what five reasons are Airport Authorities created?

A
  1. Service Area Growth

Airport service area has outgrown the local municipality. As a result, the tax base must be expanded to handle the liability. Not an easy sell when the airport is self sufficient.

  1. Issue Focus

Governing board can concentrate on airport issues rather than broader social or community issues.

  1. Economies of Scale

Combining of several political jurisdictions with separate airport responsibilities creates more efficient economies of scale. Resultant smaller staff requirements generally results in better coordination with airport management.

  1. Decisions On-scene

Authorities provide on-scene decision making, thus reducing political influence.

  1. Multi-jurisdiction Governance & Benefits

Multiple jurisdictions may participate in the benefits provided by the airport and in it’s governance.

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16
Q

What differentiates a Port from an Airport Authority?

A

Port Authorities are generally a special, legally chartered institution with the same status as public corporations. Can be responsible for various modes of public transportation facilities such as heliports, tunnels, harbors, toll roads, and rail.

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17
Q

What are the advantages to an airport of municipal ownership?

A
  1. Shared Resources

Access by airport admin to city or county resources (Examples: engineering, police, finance) that could not be justifiably duplicated.

  1. T & B

Power to tax or issue bonds

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18
Q

What are the disadvantages to ownership of an airport from the perspective of a municipality?

A
  1. Fiscal Liability

During times of fiscal constraint, airports often viewed as a liability, thus susceptible to budget and personnel constraints (furlough days) of entire municipality, even when self sufficient.

  1. Competition

Competing with other divisions or departments such as Parks.

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19
Q

How and why is an Airport Commission formed?

A

Airport Commissions are formed as part of the main municipality they serve (example: LAWA operates as a Commission of the City of LA) with politically appointed board members to provide focused leadership, specialized attention, business expertise, efficient operations and economies of scale.

Often created to overcome a lack of leadership focus within the municipality. Can be advantageous so long as doesn’t become too politicized.

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20
Q

Airport Authority effectiveness can be determined by:

A
  1. App’t Control

Who controls appt’s to the governing board.

  1. Level of Authority

What level of control does the Authority have over budget, contracts, and personnel.

  1. T, B, & ED

Is there power to levy taxes, issue bonds, or exercise eminent domain.

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21
Q

What are the disadvantages of Airport Authority ownership of an airport?

A
  1. Limited Resources

Resources and finances may be limited.

  1. Airport Liability / Mgmt Issues

Authorities are often formed when cities want to divest from the airport’s liabilities or management issues.

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22
Q
  1. What is the conflict for municipalities between public and private entity status of airports?
  2. A possible solution?
A
  1. Needed vs Speculative Projects

Normally in gov’t, centralized tax collection provides funding for services that can not stand alone.

An airport, in support of the NAS and to generate revenue, may desire to build a hangar or terminal. Municipal or County policies often strictly prohibit speculative projects. If allowed, may strain relationships with other dep’ts.

  1. Formation of an Airport Authority.
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23
Q
  1. Airports can operate as stand-alone enterprises since _______ and _______ are ________, as in a business.
  2. Because of this, _______ _______ can be _________ for ________ ___________.
A
  1. revenues / expenses / related

2. user fees / charged / services rendered

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24
Q

What are three distinctions between publicly operated airports and private corporations?

A
  1. Subsidies

Airports often receive gov’t subsidies.

  1. T & B

Municipalities or Authorities can often issue bonds or provide tax exempt financing for airport projects.

  1. Benevolence

Public airports can also make a decision for maximum community benefit, even if not supported by the economic needs of the airport.

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25
Q

Under what two circumstance does tort law affect, or not affect, airports?

A

Generally immune when acting in gov’t capacity, but not for business or enterprise ops.

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26
Q

Concisely describe airport privatization.

A

Privatization is the concept of shifting gov’t functions to private enterprise.

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27
Q

The sale or lease of airport property has historically been discouraged by the federal gov’t by what means?

A

Grant Assurances

Along with specifying the use of airport revenue, the setting of fair and reasonable fees, etc., the disposition of airport property is Included and fiscally discouraged.

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28
Q

What is considered the most extensive form of privatization in the US?

A

The sale or lease of public assets, such as an entire airport, to a private corp.

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29
Q

Under what venue is airport privatization allowed?

A

Airport Privatization Pilot Program

Initiated with the FAA Reauthorization Bill of 1996 and amended with the FAA Reauthorization Bill of 2012.

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30
Q

What restrictions to participation are involved in the Airport Privatization Pilot Program?

A
  • Only 10 airports allowed.
  • Of those, only one can be a large hub, and one must be a GA airport.
  • Air carrier airports must be leased.
  • GA airports may be leased or sold.
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31
Q

What two Grant Assurance requirements are exempted under the Airport Privatization Pilot Program?

A
  1. Reinvestment

The requirement to use proceeds from the sale or lease of airport property on the airport.

  1. Repayment

The requirement to repay federal grants or return property acquired with federal assistance.

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32
Q

What is considered a good compromise between continuing to municipally own an airport or seeking privatization?

A

Forming an Airport Authority.

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33
Q

What factors can influence how an airport is organized?

A
  1. Governing body
  2. Size of the airport
  3. Resource allocation - Functions of the airport operated internally or externally
  4. Political environment
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34
Q

What is a characteristic of jobs as airports get larger?

A

Increasingly greater job specialization

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35
Q

The primary areas managed by an Airport Director are:

A
  1. Finance and Admin.
  2. Planning and Engineering
  3. Ops and Mntce.
36
Q

Provide examples of Finance and Admin responsibilities.

A
  • Accounting (payroll, audits, accts payable & receivable)
  • Budgets
  • HR
  • Procurement
  • Public Relations
  • Air Service Development / Marketing
  • Real Estate / Property Mgmt
  • Rates and Charges
  • Noise Abatement
  • Business Planning
  • Customer Service
  • Intergovernmental Relations
37
Q

Provide examples of Planning and Engineering responsibilities.

A
  • Capital Improvement Plan
  • Cnstrctn standards
  • Airport Master & Layout Plans
  • Environmental Laws
  • Participation in Regional Transportation Planning
  • Admin Space Planning
  • Noise Abatement Planning on some occasions
  • Frequently works with Airport District Office (ADO) in the admin of federal grants, through the Airport Improvement Program (AIP), and state grants.
38
Q

Provide examples of Operations and Maintenance responsibilities.

A
  • Enforces Operations and Security Regs on the airfield and sometimes landslide.
  • Ensures compliance with 14 CFR Part 139 and other applicable directives, CertAlerts, and ACs.
  • Conduct airfield inspections and maintain signs, lighting, markings, etc.
  • Maintain other airport assets such as fleet vehicles, buildings, and grounds
  • Wildlife Mgmt, Cnstrctn Sfty, Police, and Fire
39
Q

Positions that fall outside airport management’s vertical hierarchy are ______________ and ______________.

A

Legal Counsel / Financial Auditor

40
Q

What two positions does ICAO recommend report directly to the Airport Director?

A
  1. Security

2. Safety

41
Q

What federal act oversees the consultant selection process?

A

Federal Property and Administrative Services Act (Brooks Act) of 1949

42
Q

What does the Brooks Act require?

A

Requires Consultant selection to be based on qualifications and award of contracts be made according to a fair and open selection process.

43
Q

What could be the result of not understanding or abiding by laws and regs for an airport executive?

A

Job loss, or in egregious cases, civil or criminal liability or prosecution.

44
Q

What type of law is considered statutory and against society?

Three degrees?

A

Criminal Law

  1. Felony - most serious with prison terms exceeding one year
  2. Misdemeanor - less serious, but still a crime, with jail terms of less than a year
  3. Infraction - governed primarily at the state level and not considered a crime or offense, with fines the likely result
45
Q

What type of law deals with injury to an individual?

A

Civil (tort or contract) Law

Notes:

  • Contract Law does not involve negligence
  • Injury refers to physical, property, reputation, and/or the loss of rights without cause.
  • There are many actions (absent, wrong, negligent, loss of rights (noise), etc.) that can lead to civil lawsuits
46
Q

Define negligence.

A

Reasonable Care

Failure to use reasonable care and behave as an ordinarily prudent person would act under similar circumstances.

47
Q
  1. What is generally meant by governmental immunity?

2. Are counties and cities included?

A
  1. Gov’t can not commit a legal wrong and is immune from civil suit or criminal prosecution.
  2. Yes, as they are considered divisions of the State.
48
Q

Is Gov’t immunity extended to employees?

A

Yes, so long as they are acting within the scope and authority of their positions.

49
Q
  1. What is “active negligence”?

2. Provide examples, as related to airports, that are especially open to active negligence.

A
  1. Applies to those who actively participate, know about, and are complicit in a negligent act. Failure to perform a precise duty that had previously been agreed to is a covered circumstance.
  2. Aircraft incident / accident response, snow removal, airfield maintenance, and environmental remediation are good examples.
50
Q
  1. How long are grant assurances, incorporated into AIP grant agreements, normally good for?
  2. To exactly what type of projects does this requirement apply?
A
  1. With some exceptions, normally 20 years or the useful life of the facilities or equipment.
  2. Airport Development and Noise Compatibility Projects
51
Q

Grant assurances balance three competing, but equally important public interests. What are they?

A
  1. Local issues - The airport operator managing local affairs.
  2. Public Needs - The FAA ensuring that federal funds are used to meet the needs of public air transportation.
  3. Social Objectives - The federal gov’t’s goal of promoting social objectives such as disadvantaged businesses or those with disabilities.
52
Q
  1. How many sponsor assurances are there?

2. What is a key component of all of them?

A
  1. 39
  2. Airport sponsors must comply with provisions of all applicable grant assurances, even pre-existing conditions. There is no grandfather clause.
53
Q

While some grant assurances are finite, what four are guaranteed to last the life of the airport?

A
  1. Civil Rights
  2. Airport Revenue
  3. Real Property acquired with Federal Funds
  4. Exclusive Rights
54
Q

List some grant assurances that have proven difficult to comply with.

A
  1. GA5 Preserving Rights and Powers - restricts land / property sales and TTF agreements.
  2. GA19 Ops & Mntce - Minimum standards of airport operation for the airport and users.
  3. GA20 Hazard Removal and Mitigation - Protect airspace around an airport from obstructions.
  4. GA21 Compatible Land Use
  5. GA22 Economic Non-discrimination - Available to all, on reasonable terms, without “just” discrimination.
  6. GA23 Exclusive Rights - Restricts the granting of exclusive rights to conduct a particular aero activity unless burdensome, impractical, or requires unreasonable space reduction of initial provider of activity.
  7. GA24 Fee and Rental Structure - Charges set to “strive” for self sufficiency, without assessing fees for programs paid for with federal grant monies. Additionally, fair market value (FMV) required unless entity is for community good (CAP, parks, etc.) or military.
  8. GA25 Airport Revenues - Ensures airport generated revenues and local fuel taxes are reinvested in the sponsor’s airport system. Yearly audit required to ensure compliance. Revenues earned by the airport not directly related to aviation “may” not be covered by this GA.
  9. GA31 Disposal of Land - Land no longer used by, or of use to, an airport in conjunction with its operation must disposed of at FMV ASAP. Profits made on the sale must be used on the airport or sent to the Aviation Trust Fund.
  10. GA39 Competitive Access - Requires that medium to large hub airports report any inability, and the reason why and for how long, to accommodate expanded service by an air carrier.
55
Q

Within Grant Assurance #5, Preserving Rights and Powers, why does the FAA strongly discourage Through-the-Fence (TTF) Agreements?

A

Safety, security, and economic equity concerns.

56
Q

An airport’s published “minimum standards” for commercial operators, as part of Grant Assurance #19 (Ops & Mntce) and outlined in AC 150/5190-1, must meet what three general requirements?

A
  1. Relevant to the operation
  2. Reasonably attainable
  3. Uniformly applied
57
Q

Minimum Standard advantages to the airport include:

A
  • safe environment
  • quality services provided to public
  • conflict avoidance between tenants
  • political influence avoidance
  • minimum tenant insurance levels
58
Q

For tenants, Minimum Standards ensure all operators have __________ and __________ levels of investment and obligations to the airport that are the same.

A

initial / continuing

59
Q

Another component of Grant Assurance #19 (Ops & Mntce) for airports is the establishment of ___________ and ___________ that govern tenants and employees, such as:

A

rules / regulations

  • security
  • conduct of individuals
  • conduct of tenants and vendors
  • schedule of fees rates, and charges
  • vehicle operations
  • aircraft operations
60
Q

Grant Assurance #22 (Economic Non-discrimination) requires that the airport be available to all public users at reasonable terms without ___________ discrimination. In adhering to this, airports must not discriminate against ____________, but can against a ___________ of user if unsafe or incompatible.

A

unjust / individual / class

A good example would be sky-diving at ORD.

61
Q

Grant Assurance #24, Fee and Rental Structure, requires the airport sponsor to set fees, lease rates, and other charges so as to __________* to be self sufficient. In addition, they must __________ be set to cover the cost of programs or land already paid for with __________ __________.

A

attempt* / not / federal funds

  • In other words, no “sweetheart” deals set far below market value.
62
Q

Grant Assurance #23, Exclusive Rights, restricts an airport from granting a tenant the exclusive right to provide a commercial service, unless unreasonably __________, __________, ___________, and reduce leased space by existing provider, or for the ___________ itself.

A

costly, burdensome, impractical / airport

Notes (5190-6B Airports Cmplnce Hdbk p. 8-6):

  • Exclusive Rights can not be granted unless both impractical and causes incumbent to reduce leased space to accommodate.
  • Incumbents must not “bank” land
  • A sponsor is not considered to be running afoul of Grant Assurance #22, Economic Non-discrimination, if incumbent prevented from responding to RFP to increase competition, thus precluding an exclusive right being indirectly granted.
63
Q

Grant Assurance #31, Disposal of Land, requires an airport to do what when land purchased _________ _________ _________ for noise compatibility, airport development, or aeronautical purposes is no longer needed?

A

with federal funds

Sell at fair market value (FMV) ASAP.

Note: There are several options to consider for monies received from the sale of acquired for noise abatement purposes.

64
Q

Grant Assurance #25, Airport Revenues, restricts the use of airport generated revenue and local aviation fuel taxes to be expended on ____________ or ____________ costs of the airport. In addition, a ____________ ____________ is required to assure the federal gov’t that funds have been properly distributed.

A

capital / operating / yearly audit

65
Q
  1. What are the three possible intents of Advisory Circulars (AC)?
  2. Are they binding?
A
  1. Possible intent of ACs?
    • Interpret FARs
    • Info and guidance on a specific subject
    • Show methods of compliance to a FAR
  2. Not binding unless incorporated by reference into a reg. These have the title “FAR Guidance Material”.
66
Q

Grant Assurance #39, Competitive Access, requires what of medium and large hub airports?

A

Required to report to the Sec’y of Transportation why unable (or for how long) to accommodate the request of an air carrier to serve their airport.

67
Q

As with mentioning in regs, ACs are incorporated by reference in ___________ ___________ to ensure the requirement for airport compliance.

A

AIP Grants

68
Q

What is FAA Order 5190.6B?

A

Known as the “Airports Compliance Handbook”, it provides the policies and procedures in carrying out FAA functions related to airport compliance.

69
Q
  1. What are FAA Orders?

2. Why are they important?

A
  1. Guidance provided to FAA personnel on directives covering airport safety, operations, planning, obligations, etc.
  2. FAA Orders are essentially the “rules” for airport management.
70
Q

Small airports that receive funds in excess of a minimum amount must have a ________ DBE program. Small, medium, and large hub airports receiving development grants over __________ need a _________ program.

A

Basic / $250,000 / full

71
Q
  1. What percentage of highway and transit assistance funds must be appended through disadvantaged business enterprises (DBE).
  2. How are businesses classified as a DBE?
A
  1. 10%
  2. A small business that is 51% owned and controlled by one or more socially and economically disadvantage individuals, including women.
72
Q
  1. Three characteristics of GA Airports?

2. How does a GA airport become a reliever?

A
  1. GA Airports are:
    • the largest category of airports in the US
    • publicly or privately owned
    • able to enplane up to 2,500 commercial pax
  2. Relievers are designated by the FAA as a reliever of congestion at commercial service airports.
73
Q

When did DBE compliance become mandatory?

A

Airport and Airway Safety and Capacity Act (Subpart D) of 1987

74
Q

Airports are operated by one of what four types of owners?

A
  1. Municipal Gov’t
  2. Authority
  3. Private
  4. Other local gov’t
75
Q

What are the two classifications of commercial service airports and how are they determined?

A
  1. Non-primary - 2,500 to 10,000 annual enplanements

2. Primary - >10,000 annual enplanements

76
Q
  1. Airports are further classified into ________, _________, and _________ hub airports.
  2. Approximately _________ airports in the US are large hubs, representing ________ of enplanements.
A
  1. Small, medium, large

2. 30, 70%

77
Q

While both joint and shared-use airports are owned by the US Gov’t and co-located with Part 139 Ops., what is the difference?

A

Joint-use means a portion of the airport is leased to the Part 139 entity, whereas, shared-use means federal and Part 139 entity share movement and safety areas.

78
Q
  1. Where are draft regs published for comment by the nat’l gov’t?
  2. Under what circumstance(s) may the NPRM process be ignored?
A
  1. Federal Register

2. During the need for emergency rule-making.

79
Q
  1. When is an NPRM normally issued?

2. What Act defined the NPRM process?

A
  1. When an independent gov’t agency desires to add, modify, or remove a reg.
  2. Admin Procedure Act of 1946
80
Q

What is the purpose of an organization chart? (Page 33)

A

To show the formal authority and relationships between subordinates and superiors at various levels and the channels of communication within the organization.

81
Q

What are the various forms of airport ownership? (Pages 22 - 33)

A

Authority, Municipality, Other governmental entities, Private

82
Q
  1. When is an NPRM normally issued?

2. What Act defined the NPRM process?

A
  1. When an independent gov’t agency desires to add, modify, or remove a reg.
  2. Admin Procedure Act of 1946
83
Q
  1. Where are draft regs published for comment by the nat’l gov’t?
  2. Under what circumstance(s) may the NPRM process be ignored?
A
  1. Federal Register

2. During the need for emergency rule-making.

84
Q
  1. Where are draft regs published for comment by the nat’l gov’t?
  2. Under what circumstance(s) may the NPRM process be ignored?
A
  1. Federal Register

2. During the need for emergency rule-making.

85
Q
  1. When is an NPRM normally issued?

2. What Act defined the NPRM process?

A
  1. When an independent gov’t agency desires to add, modify, or remove a reg.
  2. Admin Procedure Act of 1946
86
Q

Based on annual operations and types of aircraft based there, what are the four categories of GA airports?

A
  1. National - Large metro areas with sophisticated corporates
  2. Regional - Metro areas with inter/intrastate flying by all GA
  3. Local - Backbone of GA. Avg city. Piston, charter, flight inst.
  4. Basic - Small GA airport that links cmnty with nat’l airport syst.

Airport Finance & Admin (9 decks)

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