Eight Airport Public-Private Partnerships Taking Off in the U.S.
After a pandemic slump, airline travel has returned stronger than ever, with TSA measuring the highest single day volume of passengers in U.S. history this summer. Air travel is only expected to increase: according to an FAA report, annual domestic boardings are expected to rise from 800 million in 2023 to nearly 1.4 billion over the next 20 years. Accommodating this expected rise in demand for air travel will require modernizing and enhancing our nation’s airports to expand capacity. While Congress considers FAA reauthorization legislation—which has historically passed every five years—to support federal investments in airport infrastructure, airports also continue to leverage private sector partnerships to deliver needed infrastructure projects and prepare for the future of air travel.
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Unlike in some countries, fully private ownership of airports is rare in the United States. While FAA’s Airport Investment Partnership Program permits the sale or lease of public airports to private entities, very few airports have participated. Notably though, the city of Avon Park, FL, just recently submitted an application to lease its local airport to a private airport operator.
Public-private partnerships (P3s), on the other hand, are far more common. P3s are long-term contracts where a private entity assumes certain responsibilities for a public asset, such as building, financing, operating, and maintaining it. P3s allow local governments to transfer the financial risk involved with transportation projects to private partners while also incorporating private sector innovations and investment, all without fully privatizing public infrastructure.
Most travelers likely do not pay close attention to how infrastructure projects like airports are financed and built. Yet P3s are responsible for a substantial number of airport projects today—both large and small. Some P3s are established to build and operate entire airports, while other P3s are large-scale, complex projects to replace and redevelop entire terminals. However, they also include a diverse range of smaller projects at airports of all sizes and for a variety of different airport functions, including water supply and parking.
See below for a summary of projects proposed or completed since our 2017 update on the status of airport P3s in the U.S.
Conclusion
Airport P3s have shown both promise and challenges across the United States. While some completed projects demonstrate the potential benefits of private investments and management in airport infrastructure development, other projects highlight the importance of careful planning, budgeting, and risk management in a P3.
In the wake of the Bipartisan Infrastructure Law (BIL), local governments have greater resources for infrastructure projects. As a result, P3s may be overlooked as a model for developing new projects, because local governments often see them as a useful means to finance projects only when they are cash-strapped. However, airports should still consider P3s as a valuable option for low-risk, cost-efficient, high-quality projects. P3s can help local governments reduce their exposure to risk of projects going over budget and alleviate some of the burden of design, development, and long-term management of airports. By leveraging private specialized expertise, innovation, and financial resources, passengers may also experience enhanced facilities and more streamlined services.
With demand for air travel continuing to rise, cities may also consider other ways to finance airport developments, further privatizing facilities or airports through asset recycling—the sale or lease of government assets for the purpose of using the generated funds to invest in new infrastructure projects. One study estimated that if the U.S. were to lease 31 of its medium to large airports, they would generate $1.3 billon in income within 50 years to fund infrastructure projects.
As Congress advances FAA reauthorization, and local governments develop plans to capitalize on federal resources, policymakers at all levels of government should consider how to encourage models of innovative and cost-efficient project delivery—and to ensure American air travel is a world-class experience in the decades to come.
Rendering of LAX’s Automated People Mover train
Source: Los Angeles World Airports
Construction of a new pipeline connecting the Clovis Regional Airport to the local city water system
Source: EPCOR
Construction of pedestrian walkways at LaGuardia Airport.
Source: Engineering News-Record
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