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AAAE Airport Certified Employee (ACE) - Airport Finance > Module 1 - The Airport Fiscal Environment > Flashcards

Module 1 - The Airport Fiscal Environment Flashcards

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1
Q
  1. Who are Airport Sponsors?
A

Operators of airports, typically municipalities or authorities who own and/or operate airports.

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2
Q
  1. What is the Airport Improvement Program?
A

A system of taxes and fees on users with local funding participation.

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3
Q
  1. Can airport surplus funds be shared or diverted with other municipal departments?
A

No, all airport funds must be reinvested in the airport.

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4
Q
  1. What is the discipline of Airport Finance?
A

Compliance with federal regulatory requirements and public finance practices.

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5
Q
  1. Is the field of Airport Finance more or less restrictive as compared to other governmental entities?
A

More restrictive, due to the regulatory constraints in place.

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6
Q
  1. Is airport financial management a highly specialized discipline?
A

Yes, although the concepts can be mastered and applied to all airports, whether busy connecting hub or a small general aviation airport.

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7
Q
  1. What are the three components of the National Air Transportation System?
A

Airports, Airspace, and Aircraft.

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8
Q
  1. Who owns the aircraft?
A

Airlines, other corporations, and individuals for commercial, business, or personal purposes.

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9
Q
  1. Airspace is operated by who?
A

The Federal Government

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10
Q
  1. Airports are owned by who?
A

Local, regional, and state governments.

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11
Q
  1. What is an airport?
A

An area of land or water that is to be used for the landing or takeoff of an aircraft.

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12
Q
  1. What is the National Plan of Integrated Airport Systems (NPIAS)?
A

The official plan for developing public-use airports

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13
Q
  1. How are airports classified?
A

By activity and whether they receive scheduled commercial air service.

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14
Q
  1. Airports are grouped into what two main categories?
A

Primary and Non-primary.

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15
Q
  1. Define Primary Airport?
A

An airport that has scheduled air carrier service AND 10,000 or more enplaned passengers per year.

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16
Q
  1. What are the categories of airports and how are they defined?
A

a. Commercial Service
i. Primary
1. Large Hub – 1% or more of annual passenger boardings
2. Medium Hub – at least .25%, but less than 1% of annual passenger boardings
3. Small Hub – at least .05%, but less than .25% of annual passenger boardings
4. Nonhub – more than 10,000 but less than .05% of passenger boardings
ii. Nonprimary
1. Nonhub – at least 2,500 and no more than 10,000 annual passenger boardings
b. NonCommercial
i. Nonpirmary
1. Reliever
2. General Aviation

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17
Q
  1. What are some of the common facilities at commercial service airports?
A

a. Airside:
i. Airfield
1. Runways
2. Taxiways
ii. NAVAIDS
iii. Control tower
iv. Concourse building
v. Aircraft parking aprons/ramps
vi. Passenger boarding bridge
vii. Baggage equipment systems
viii. International arrival facilities
ix. Fixed based operators
x. Aircraft rescue and fire fighting facilities
xi. Fueling facilities
xii. Airport and aircraft support facilities
b. Landside:
i. Roadways
ii. Intra-airport transit systems
iii. TSA Checkpoint
iv. Terminal Building

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18
Q
  1. What are the classes of airspace?
A

a. A – 18,000 – 60,000 feet – commercial aircraft
b. B – Terminal Radar?Service surface to 10,000
c. C
d. D
e. E
f. G – surfacer to 14,500

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19
Q
  1. What are the three regulatorY classes of aviation activities listed in the FAR?
A

a.Part 121 – scheduled airlines operating aircraft with more than nine seats
b.Part 135 – scheduled or non-scheduled airlines operating aircraft with less than 9 seats.
c.Part 91 – all other operators, non-commercial.

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20
Q
  1. When did deregulation occur?
A

1978 – Airline Deregulation Act of 1978 signed by Pres. Jimmy Carter.

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21
Q
  1. What percentage of the cargo industry do airlines account for?
A

35% share

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22
Q
  1. How much cargo was transported in 2018?
A

52 million tons

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23
Q
  1. What is Airport Sponsor Governance?
A

The Legal authority establishes the rights, powers, obligations, and responsibilities that allow airports to operate.

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24
Q
  1. What are the governance models?
A

a. Municipal ownership
b. Single-Purpose Airport Authorities
c. Port Authorities
d. State Ownership
e. Federal Ownership
f. Private Ownership
i. 1997 Airport Privatization Pilot Program

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25
Q
  1. What program creates a financial relationship between the federal government and publicly-owned airports that has a significant impact on the framework for airport financial operations?
A

Airport Improvement Program (AIP).

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26
Q
  1. What areas does the Department of Transportation have a direct connection with airports?
A

a. Essential Air Service
b. Small Community Air Service Development Analysis
c. Competition and Policy Analysis
d. Air Carrier Fitness

27
Q
  1. What is the Office of Airport Planning and Programming (APP)?
A

This is the office responsible for administering policy related to airport planning, development, and environmental protection. APP also overseed the AIP grants and Passenger Facility Charges (PFC) programs.

28
Q
  1. What is the Office of Airport Safety and Standards (AAS)?
A

The office is responsible for the development and promulgation of policies and standards related to the certification of airports, and the maintenance, design, and construction of airfield facilities.

29
Q
  1. What is the Office of Airport Compliance and Management Analysis (ACO)?
A

The office is responsible for the oversight of airport fiscal practices relevant to federally mandated obligations that are conditions for receiving federal grants.

30
Q
  1. What are the Airports’ Regional and District Offices (ADO)?
A

The offices that oversee FAA’s interest in airport safety, planning, and development.

31
Q

What is the Office of Aviation Policy and Plans (APO)?

A

)? The office is responsible for documentation for providing guidance to federal decision-makers. The office assesses the financial impact of proposed legislation,m reviews benefit-cost analyses, and forecasting future aviation activity.

32
Q
  1. What is the Office of Policy, International Affairs, and Environment (APL)?
A

The Office is responsible for the development and administration of national aviation policy.

33
Q
  1. What is the Office of Environment and Energy (AEE)?
A

The Office responsible for developing and administering national policy on environmental protection and energy resources.

34
Q
  1. What is 14 CFR Part 151?
A

Federal Aid to Airports - prescribes the specific policies and procedures for administration of federal grants-in-aid to airports.

35
Q
  1. What is 14 CFR Part 152?
A

Federal Aid Program – complements Part 151 by providing additional detail regarding project eligibility and the administration of grant fund payments.

36
Q
  1. What is 14 CFR Part 158?
A

Passenger Facility Charges – provides requirements for applying for PFC Funds, project eligibility, and administrative policies and procedures for the collection and disbursement of funds.

37
Q
  1. What is 14 CFR Part 13?
A

Investigation and Enforcement Proceedings – the informal mediation process of the FAA in disagreements between airports and others in which the FAA encourages good-faith efforts on both sides.

38
Q

What is 14 CFR Part 16?

A

Rules of Practice for Federally Assisted Airport Enforcement Proceedings – Formal mediation process for FAA between Airport and users. The burden of proof falls on the complainants. If an airport is at fault and does not remedy, AIP grant funds may be suspended or terminated

39
Q
  1. What are 49 CFR Parts 26 and 23?
A

Participation by Disadvantaged Business Enterprises – these regulations establish both the policy and procedural requirements for sponsors to develop and implement plans for including economically disadvantaged business enterprises (DBEs) in federally funded projects and airport concession opportunities.

40
Q
  1. How is the FAA funded?
A

Through the authorization and appropriations process. The Authorization bills can originate in either the House of Representatives or the Senate; however, the Appropriation bill can ONLY originate in the House of Representatives.

41
Q
  1. Is the FAA a permanently authorized agency?
A

No

42
Q
  1. What is Grant Assurance 22?
A

Economic Nondiscrimination – requires airport sponsors to make facilities available for public use to aeronautical users on reasonable terms and that rules, regulations, rates, fees, and rentals for airlines are non-discriminatory and substantially comparable.

43
Q
  1. What is Grant Assurance 23?
A

Exclusive Rights – precludes airport sponsors from giving exclusive rights to the provision of aeronautical users.

44
Q
  1. What is Grant Assurance 24?
A

Fee and Rental Structure – requires airport sponsors to employ rate and fee structures that make the airport as self-sustaining as possible under the specific operation circumstances of the airport.

45
Q
  1. What is Grant Assurance 25?
A

Airport Revenues – requires that all revenues generated on-airport to be expended only for the capital and operating costs of the airport or the local airport system.

46
Q
  1. What five general principles can be associated with the Airport Rates and Charges Policy of 1996 and amended in 2013?
A

a. Direct negotiation and resolution
b. Fair and reasonable fees
c. No unjustly discriminatory rates
d. Self-sustaining rate structure
e. No revenue diversion

47
Q
  1. What are the general key concepts of the Airport Revenue Use Policy?
A

a. Definition of airport revenues as all revenue from airport users and lessees and from sale or disposition of assets; and as state and local taxes on aviation fuel
b. Definition of revenue diversion as use of airport revenue for purposes other than the capital or operation costs of the airport of the local airport system.
c. Specification of prohibited uses as direct or indirect payments that exceed the fair and reasonable value of services received; expenses related to economic develop[ment; and payments-in-lieu-of-taxes (PILOTs) and impact fees.
d. Definition of allowable marketing expenses as marketing and promotional expenses explicitly directed towards promoting airport competition or public awareness of an airport, or airline incentives such as fee waivers, but not direct subsidies, for a limited period of time.
e. Definition of reasonable indirect costs as costs allocated uniformly among sponsor departments using federal Office of Management and Budget cost allocation plans that do not result in the shifting of disproportionate burden to the airport.
f. Allowance of less-than-fair-market value charges for nonprofit or community use of airport land or facilities.

48
Q
  1. What function(s) are handled by the Finance and Administration?
A

a. Management and direction of all airport financial, administrative, and support activities.
b. Accounting
c. Budgeting
d. Financial planning and analysis
e. Rates and charges,
f. Treasury and debt management
g. Procurement and purchasing
h. Risk management
i. Human resources

49
Q
  1. What are Accounting Functions?
A

a. Maintenance of the airport operator’s general ledger and chart of accounts
b. Maintaining the airport’s fixed asset ledger
c. Preparing financial statements and reports
d. Accounting for and paying the airport’s payables (accounts payable)
e. Accounting for and receiving the airport’s invoices (accounts receivable)
f. Grant accounting and preparation of required FAA grant forms

50
Q
  1. What are the budgeting functions?
A

a. Analyzing historical trends in revenues and operating expenses
b. Coordinating with other departments to assist in the preparation of departmental budgets
c. Preparation of explanatory materials for senior management and approving authorities (e.g. city councils or boards)
d. Preparation of variance and other management reports to analyze performance versus budget

51
Q
  1. What are the financial planning and analysis functions?
A

a. Operating cost analysis, including analysis of financial terms of operating contracts and cost allocations
b. Preparation of airline and other tenant rates and charges analyses
c. Analysis of the financial implications of proposed capital improvements or operating initiatives
d. Preparation of capital program funding plans, including the analysis of eligibility for federal funding
e. Supporting the preparation of AIP grant and PFC applications
f. Financial modeling, including the preparation of long-term financial forecasts.

52
Q
  1. What are the Debt management and Treasury Functions?
A

a. Compliance with bond covenants, including the flow of funds and the rate covenant
b. Issuance of airport debt instruments in compliance with federal, state, and local regulations and policies
c. Coordinating with rating agencies and investors
d. Filing continuing disclosure in compliance with continuing disclosure agreements
e. Investment of airport’s cash balances in accordance with state and local regulations and policies

53
Q
  1. What are Commercial Management and Real Estate Functions?
A

a. Negotiation and management of the airport’s agreements with airlines, including the assignment of terminal and another real estate
b. Negotiation and management of the airport’s agreements with concessionaires and terminal concession planning
c. Management of the airport’s public parking facilities, rental cars, and other modes of transportation
d. Negotiation and management of the airport’s agreements with other tenants
e. Monitoring tenant and concessionaire compliance with agreements
f. Development and management of air service incentive plans and air service development

54
Q
  1. What are Public Debt Instruments and Debt Service?
A

Revenue Bonds general airport revenue bonds, or special facility revenue bonds.

55
Q

What category accounts for between .25% and 1% of total U.S. passenger enplanements?

A

Medium Hub

56
Q

A “Large Hub” airport accounts for what ___% of total US passenger enplanements?

A

At least 1%

57
Q

A _______ airport provides pilots with an attractive alternative to using congested airport hubs?

A

Reliever

58
Q

Commercial Service Airports are defined as public airports with at least______ or more enplaned passengers per year?

A

2500

59
Q

Small Hub airports enplane at least ______ to _______% of total US passenger enplanement?

A

0.05 to 0.25%

60
Q

What has a goal of providing guidelines for future airport development, which will satisfy aviation demand in a financially feasible manner, while at the same time resolving the aviation, environmental and socioeconomic issues of the community?

A

The Airport Master Plan

61
Q

Why are Passenger Facility Charges exempt from the Federal procurement process?

A

Because PFCs are considered a user fee, not a grant.

62
Q

Any Federally-funded construction contract that exceeds $2,000 require airports to?

A

Comply with the Davis-Bacon Act and establish a Disadvantaged Business Enterprise program

63
Q

What does DBE Regulation Title 49 CFR 26 require airports to do?

A

They require airports to implement a DBE program if they anticipate awarding more than $250,000 in prime contracts using federal funds during a fiscal year

AAAE Airport Certified Employee (ACE) - Airport Finance (5 decks)

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