Brief

Report: US airports need $100B investment over 5-year period

Dive Brief:

  • A new report from the Airports Council International–North America revealed that it will take approximately $100 billion over the next five years to make the necessary infrastructure improvements to the country's airports, a 32% increase since the council released its previous numbers in 2015, according to The Hill.

  • The annual breakdown of that figure is more than twice the income stream currently coming into airports via user fees, grants and revenues. Only some projects qualify for the annual $3.35 billion in federal Airport Improvement Program grants.

  • Advocates of increased airport spending point to the existing federal cap on how much airlines can charge passengers to assist in paying for improvements. Currently, the maximum is $4.50 per ticket, but that amount hasn’t increased in 15 years. Lawmakers could update the limit when they reauthorize the Federal Aviation Administration later this year.

Dive Insight:

Officials could consider public-private partnerships to lighten the $100 billion load. Typically, a P3 agreement in construction occurs between a public agency and a consortium of private companies that will finance, design, build, operate and maintain a structure or other project. This can provide enormous relief to cash-strapped agencies that are then free to leverage their limited funds across more projects.

The payoff for the private sector comes when the P3 collects the tolls or user fees associated with the project or begins receiving some form of agreed-upon payment for a set period of time. For example, the Port Authority of New York and New Jersey recently entered into a P3 with the Skanska–led LaGuardia Gateway Partners consortium. The group arranged financing and designed the project, which is expected to be substantially complete in 2022. LaGuardia Gateway Partners has also entered into a 35-year operation and maintenance agreement with the airport.

According to Dodge Data & Analytics' latest nonresidential construction starts report, airport terminal projects boosted overall activity in January thanks to the $3.4 billion LaGuardia Airport central terminal construction job, in New York, as well as projects in other major metros, such as San Francisco ($477 million), Seattle-Tacoma ($420 million) and Chicago ($70 million). 

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Filed Under: Economy Infrastructure