Infrastructure funding

Airport upgrades, courtesy infrastructure funds

(Courtesy Appleton International Airport)

This is a slightly different version of a story we wrote for NBC News

If construction cranes are looming over your local airport or “Please Pardon Our Appearance” signs are decking out the terminal, it may be partly thanks to Congress and the White House.

U.S. airports say money from the 2021 Bipartisan Infrastructure Law is a drop in the bucket when it comes to their funding sources and infrastructure needs. But the legislation is already helping some rip up worn carpets, upgrade restrooms and replace clunky baggage systems.

While federal dollars have long backed “airside” projects like runways and taxiways, the new infusion for terminal upgrades “is a game changer,” said Greg Cota, senior vice president of government and political affairs at the Airports Council International — North America, an industry advocacy group.

As President Joe Biden hits the campaign trail touting his broad infrastructure investments, airports are some of the most visible places to see them at work, whether or not voters reward him for it in November.

Appleton International Airport, in the battleground state of Wisconsin, received $3.43 million from the package. The funds will augment a much larger $66 million concourse expansion, which was planned before the pandemic and is scheduled to be completed by the end of 2025. Appleton, about 40 minutes southwest of Green Bay, is one of many airports that broke passenger records last year and it expects to serve 1 million travelers this year.

Financing is coming “from about eight different sources,” said airport Director Abe Weber, including local, state and federal money, bonds and the airport’s own cash. The grant awarded by the Biden administration will help pay for boarding bridges, a sustainability program that includes a microgrid and accessibility improvements such as “hearing loops” — assistive technology for people with hearing loss.

Without those funds, Weber said, “we probably wouldn’t have been able to proceed with those pieces of the project.”

Grants for many airports

Last month, the White House announced infrastructure law grants totaling $970 million for upgrades at 114 airports intended to “improve passenger experience, accessibility, and sustainability.” The discretionary awards are on top of nearly $2 billion in similar awards made over the past two years under the law’s Airport Terminal Program, a $5 billion fund for competitive grants to support terminal upgrades.

Recent grants include $35 million to help Washington Dulles International Airport in Northern Virginia construct a 14-gate terminal and transit connections to the Aerotrain and Metrorail. Another grant supplies $26 million to replace Denver International Airport’s baggage handling system.

The terminal funding is just one slice of the measure’s five-year, $25 billion pot for modernizing airports nationwide. Within that pool, a separate $5 billion is set aside for improvements to facilities and equipment owned by the Federal Aviation Administration, and $15 billion more is being distributed to airports through a formula based on passenger numbers.

Airports say they need much more.

“There’s a lot of money out there, and Congress has been generous,” said Kevin Burke, president and CEO of the North American Airports Council, who added that the government’s prioritizing the passenger experience is novel. “But it’s not enough to be able to solve the long-term problem,” he said, “which is enough infrastructure money to be able to modernize all of our airports.”

In a report last year, the group called for $151 billion to fund “critical” infrastructure improvements over the next five years. Airports typically pay for upgrades with a mélange of rent from airlines and terminal vendors, landing charges tacked on to fliers’ tickets, parking fees and money from various levels of government, as well loans and debt, often in the form of municipal bonds issued by airport authorities.

The new federal infrastructure funds could have an impact broader than the individual projects it’s supporting, some experts said.

Because airports operate in tandem with one another, improvements at small and midsize ones can help large hubs, too, said Bill Wyatt, executive director of Salt Lake City International Airport. The Utah airport received $20 million in infrastructure law funds toward its $618.7 million building and airfield work tied to the further expansion of a just-built terminal.

While “it’s great whenever you can find some additional resources,” Wyatt said, a boost to one airport’s operations can be felt across the network, “because suddenly one location now has added capacity, meaning we may get an extra flight that couldn’t have happened except for the investment of this money.”

The funding influx may have its biggest impact at smaller airports, where “these grants do play an important role in moving capital programs further and faster,” said Earl Heffintrayer, vice president and senior credit officer at Moody’s Investors Service.

South Carolina’s Myrtle Beach International Airport, which serves more than 3 million passengers a year, received $10 million in Airport Terminal Program funds for an $80 million to $90 million expansion that was put on hold during the pandemic but is moving forward now. The 18-month project, which begins in June, will add six gates to the current 12 and revamp restrooms, flooring and signage in the existing terminal.

As at other airports, the Myrtle Beach construction is being financed by various sources, including “cost recovery through billing back portions of the project to airlines operating at MYR over the life of the expanded facility,” spokesman Ryan Betcher said. The $10 million grant will allow the airport to reduce the costs it passes on to airlines, help it retain existing flight routes and attract new ones, he said.

Bipartisan Infrastructure Law dollars are also helping some airports keep their projects on track despite higher costs from inflation.

Philadelphia International Airport is in the midst of a $1.8 billion capital program that includes upgrades to roadways, terminals and the airfield. It secured $74.4 million from the infrastructure package for initiatives that fit the “shovel ready” requirements for funding, Chief Development Officer Api Appulingam said.

“It’s not that we wouldn’t have somehow found the funds to do the project,” she said, “but the grants help with the uncertainty in the bidding environment.” Now, if bids come in higher than anticipated, “we’re able to cover the cost, versus trying to find that funding elsewhere” and risk falling behind schedule, Appulingam said.

Airports Hope for Infrastructure Help

(This is a slightly different version of a story we wrote for NBC News)

When low-cost carrier Avelo Airlines launched the first of 11 new routes to small cities and secondary airports from 14-gate Hollywood Burbank Airport (BUR) in April, it raised the airport’s profile as an alternative to Los Angeles International. And put a spotlight on BUR’s outdated facilities

“The existing terminal is too close to the runways and taxiways,” explains BUR executive director Frank Miller, “And the building is now 91 years old.” A terminal replacement plan put on hold due to COVID-19 is back on track. But funding sources for this – and for other airport infrastructure projects around the country – are “simply inadequate,” says Miller.

Even before the pandemic and the sharp decline in air travel, “chronic underfunding” created a backlog of more than $115 billion in necessary infrastructure needs for just the next five years, according to a study by Airports Council International – North America (ACI-NA) released in March.

“We’re trying to build 21st century airports,” says Kevin Burke, ACI-NA’s president and chief executive office, “But we have 20th century airports that are, on average, more than 40 years old.” 

Will infrastructure funds help?

That is why airports continue pushing for an increase to one of the main ongoing infrastructure funding mechanisms for airports – the federally capped user fee on tickets known as the Passenger Facility Charge. That fee was last raised from $3 to $4.50 twenty years ago, before 9/11.

And it is why all eyes are on the $25 billion line item for airports in the Biden Administration’s infrastructure plan being hammered out in Washington, D.C.

The proposal includes $10 billion to supplement the Airport Improvement Program (AIP), $10 billion for terminal redevelopment and intermodal transit connections, and $5 billion to replace and modernize Federal Aviation Administration equipment.

ACI-NA’s study says that instead of investing in large, high-impact projects to modernize facilities and increase capacity, “airports have been forced to prioritize smaller, immediate needs like maintenance of aging structures and systems.” And now there are “tens of billions of dollars in additional projects that have been delayed or canceled due to the pandemic and economic recession.”

Projects on, Projects off

For example, during 2020, Raleigh-Durham International Airport (RDU) deferred $96 million in construction projects. And in April 2020, San Francisco International Airport (SFO) announced the postponement of a $1B renovation project for Terminal 3 West, where United Airlines operates. That project is still on hold, says airport spokesman Doug Yakel, “Although we will be revisiting the timeline for this project later this year.” 

During the pandemic, Dallas Fort Worth International Airport (DFW) put the $3 billion, 24-gate Terminal F project on pause. But it pressed ahead with some other major projects, including the accelerated reconstruction of an arrival runway, the opening of the four-gate Terminal D South extension of the international terminal, and the construction of a new operations center.

“We continued the work because it was important to the airport,” explains DFW CEO Sean Donohue. “But the projects were also important to the region. During the peak of all that work it created 4,000 construction jobs.”

Los Angeles International Airport (LAX), Portland International Airport (PDX), Seattle-Tacoma International Airport (SEA), and Kansas City International Airport (KCI) are some other airports that moved forward with major construction work during the pandemic. In some cases, completing projects ahead of schedule and with some cost savings thanks to reduced traffic in and around the terminals.

And Pittsburgh International Airport (PIT), which put a hold on it $1.1 billion terminal project in April 2020 due to the COVID-19 pandemic, was able to restart that project in February 2021.

“The pandemic really highlighted the need for our Terminal Modernization Project,” said Christina Cassotis, CEO of Pittsburgh International Airport. “We’ll be the first airport in the country built from the ground up in a post-pandemic world and that’s given us the chance to include public health as a key component of the design.”

Next steps?

Despite the summer bump in travel, passenger traffic and the revenue it brings to airports is not expected to return to pre-pandemic levels until 2023.

ACI-NA estimates airports will lose at least $40 billion through March 2022 and even more if passenger traffic stays depressed. That makes finding funding for all the needed airport infrastructure projects more important.  

The funds needed for short and long-term capital improvement projects at US airports far exceed the amounts in any of the proposed federal packages. “But the reality is that as things get back to normal and some level of funding is agreed to, you’ll see a lot more cranes, and a lot more work that will everyone,” says ACI-NA’s Burke.

“That includes communities, airports, the trades and, of course, passengers.”