Airport Business - June-July 2020 - 14

AIRPORT GURU
AUTHOR Curt Castagna

AIRPORT SPONSORS PLAY A CRITICAL ROLE IN PROVIDING

Coronavirus Relief

What is the role of the airport sponsor in providing aid to ailing airport tenants?
The Coronavirus Aid, Relief and Economic Security Act (CARES
Act) provides some assistance for small businesses through
loans and payroll relief, and also offers aid to airlines and
airports with commercial airline service. However, it falls
short in addressing the financial crisis faced by thousands of
aviation businesses that provide vital services to our nation's
air transportation system. Of the approximately $10 billion
in grants for airports contained in the CARES Act, only $100
million is allocated to the approximately 4,500 general aviation
public use airports.
Aviation businesses in the U.S.
support 1.2 million jobs and $247 billion
in annual economic activity. General
aviation companies operate at nearly
3,500 U.S. airports and thousands of areas
not served by the airlines. The aviation
activity in these cities and towns cultivate
well-paying jobs, economic activity and
connectedness. In times of crisis, they
support the movement of flights carrying
medical and testing equipment, cargo,
agriculture, emergency services personnel
and humanitarian relief supplies.
Ultimately, commercial aeronautical
businesses that are unable to meet the
obligations of their lease agreements
imperil the ability of airport sponsors
to operate safely and efficiently. Some
airport tenants may be eligible for the
small business support provided in the

ABOUT THE AUTHOR
CURT CASTAGNA

Curt Castagna, president and CEO of
Aeroplex/Aerolease Group, is a member
of the Los Angeles County Airport
Commission, president of the Van Nuys
and Long Beach Airport Associations,
and a board member of the National Air
Transportation Association. A certified
private and instrument-rated pilot,
he has instructed courses in aviation
administration at Cal State Los Angeles
for over two decades.

CARES Act via a grant or loan guarantee
program. However, the many restrictions
associated with implementation make
participation burdensome, undesirable
and often unobtainable.
For example, Title IV, subpart B of
the CARES Act - providing relief to
air carriers, air cargo and contractors
to the airlines - allows the Secretary of
Treasury to demand warrants, an equity
interest or other financial instruments
in their companies to participate in the
Air Carrier Worker Support Program
where the funds can only be used for
payroll. Participating businesses are also
prohibited from share buybacks, paying
dividends or making capital contributions
from the date of the grant through
September 30, 2021.
Among these and many other
restrictions, commercial aeronautical
businesses must also commit to not
having any involuntary furloughs
from the date of the grant through
Sept. 30. In addition, well after the Air
Carrier Worker Support Program was
put into law and the priority deadline
passed for eligible company applicants,
the Secretary of Treasury waived the
financial instrument requirement for
smaller participating companies.
Not ably, t he Nat ion a l A i r
Transportation Association (NATA)

14 \ AIRPORTBUSINESS / JUNE|JULY 2020

Airport sponsors have the
authority to either waive or
defer commercial aeronautical
rents without violating federal
grant assurances.
NATA

spearheaded efforts and achieved success
in getting Part 135 certificated charter
operators and Part 145 MRO businesses
included in the package provided to the
airlines. Additionally, FBOs that provide
ground handling services to commercial
airlines are eligible for some relief.
However, the bulk of relief provided
by the CARES Act aimed at aviation
was written with commercial airlines in
mind and ignored smaller general aviation
airports and businesses.
For example, approximately 188
airports in California are sharing
approximately $1 billion in federal aid.
Los Angeles International Airport
was allocated $323.6 million, the most
funding of any airport in the state.
However Van Nuys Airport, one of the
nation's busiest general aviation reliever
airports, was apportioned only $157,000.
Adding to an already dire situation,
Congress included a f lawed formula in
the CARES Act that erroneously gave
a disproportionate advantage to some
smaller airports, while leaving some
busier airports relatively unassisted.
What is the role of the airport
sponsor in providing aid to ailing
airport tenants? According to the
Airport Business - June-July 2020

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