Engineering Inc - July/August 2018 - 6

MARKETWATCH

Aviation Infrastructure Market Booming
By Gerry Donohue

ENGINEERING INC.

JULY / AUGUST 2018

Source: ACI-NA SURVEY

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PUBLIC FUNDING

Federal programs account
for almost half of airport
infrastructure funding.

Ac
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ngineering firms working in the aviation infrastrucThe Airport Improvement Program (AIP) provides about
ture market are flying high right now. The airlines
$3.35 billion in grants for capital improvements. That level
are profitable, and many airports-especially the
has held steady since 2012. The grants are limited to "airside"
large hubs-are planning or in the middle of huge
projects, such as runways and taxiways. They may not be
upgrade programs.
used for "landside" projects, such as for buildings or making
"It is a perfect storm," says Burns & McDonnell
improvements to attract commercial enterprises.
Aviation Vice President Bret Pilney. "There is a lot
According to the Federal Aviation Administration's (FAA)
of capital spending going on, by both airlines and airports. They
most recent National Plan of Integrated Airport Systems
are reinvesting in their terminals and facilities. It has been great."
report, U.S. airports have about $32.5 billion in AIP-eligible
Some of the largest programs include Chicago O'Hare
projects through 2021, but that is more than twice the current
International Airport ($15 billion), Los Angeles International
funding level.
Airport ($14 billion), Hartsfield-Jackson Atlanta International
Most airports also levy a Passenger Facility Charge (PFC) on
Airport ($6 billion), New York LaGuardia Airport ($4 billion),
each passenger using the airport on originating and connecting
John Glenn Columbus International Airport ($1.3 billion) and
flights. The funds can only be used for FAA-approved projects
Kansas City International Airport ($1 billion).
aimed at reducing noise; enhancing safety, security or capacity;
"The airports face a lot of development needs," says Greg
or increasing air carrier competition. Congress raised the PFC
Heaton, vice president at Crawford, Murphy & Tilly. "Facilities
to $4.50 per flight segment in 2000 but has been unwilling to
are old, passenger counts continue to climb, regulations and
increase it since then.
security requirements are expanding, and aircraft are changing."
"The PFC is now worth about half of what it once was," says
For a long time, these needs were unmet because airlines and
C&S Cos. Senior Vice President Michael Hotaling. "Increasing
airports had an often fractious relationship. The airlines have
the PFC has been a battleground between the airports, which
struggled to be consistently profitable and begrudged contributing consider it to be a user fee, and the airlines, which see it as a tax."
to airport infrastructure improvements. For their part, airports
ACEC and the airports have lobbied Congress to increase
have been constrained by limited federal funding.
the AIP and raise the PFC limit, but the House passed its FAA
"There has not been the kind of money and political fortitude
reauthorization bill earlier this year without any increases.
in the past to upgrade our airports," says Tina Millan, who directs
The legislation does include, however, $1 billion in a new
WSP's U.S. aviation practice. "Now everyone is getting really
competitive grant program for small and midsize airports.
aggressive."
A recent survey by the
Airports Council International
Airport Infrastructure Needs by Type of Development (2017-2021)
- North America reported that
U.S. airports have plans for up
50%
to $100 billion in infrastructure
46.9
improvements through 2021,
40%
although anticipated funding
only covers about half of that.
30%
"Maybe they will get to $50
billion," says Millan, "but I
expect the spend will be closer
20%
to $25 or $30 billion."
16.0
Even at that level, though,
10%
7.8
the aviation infrastructure
9.2
9.1
4.3
market will be robust for the
2.0
1.7
1.6
1.4
0%
foreseeable future.

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