Analysis of Airport Governmental Funding

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The problem of airport funding is exceptionally crucial in the circumstances of globalization. The laws about the budgetary were created in the last century and do not correspond to the needs of these organizations nowadays. Moreover, the topic of monetary sources also has to be taken into account as there are many pros and cons of privatization in this sector. Some of the researchers claim that the reason for private funding is not in the desire to ameliorate the existing management system but to decrease the financial expenditures of the government (Cruz & Sarmento, 2017). Nevertheless, other specialists in this field put forward the idea that the role of the authorities in the budgeting of the airports has increased through the last few decades and covers the most crucial costs (Sargent, 2016). The purpose of this paper is to investigate the modern system of airport funding, describe the most actual problems and provide the solutions supported by the arguments from academic works.

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Airport capital is significantly supported by the Airport Improvement Program introduced by the authorities at the end of the 20th century. However, it is crucial to mention that there are specific limitations concerning this type of funding. It covers mostly the expenditures on runways and taxiways that have a direct impact on the safety of passengers. The amount of governmental help does not completely bear these costs (Kaps et al., 2018). This is the reason why the leaders of airports encourage investments from the private sector. It is possible to assume that the best option, in this case, is to reduce the taxes for the tickets (Sargent, 2016). Nevertheless, they form a part of the national income from this sector; that is why it is a challenging task to implement this idea into real life. In the circumstances of globalization where the tourism and the flights are an ordinary part of life, the functioning of the airports is essential for a comfortable life. Despite their popularity, the problem of funding remains crucial and unsolved. In this paper, several issues would be covered, and possible solutions for them would be provided.

Governmental investments are an important part of the airport budget but not the unique one. Among the other critical monetary sources are grants for the developments, local passenger facility charges, income from the rent, and tax-exempt bonds (Tang, 2019). The problem is that those types of earnings are not always fixed and sometimes are hard to be predicted. Nonetheless, the management of the airfield is not allowed to take loans or not to pay the salary in time. This issue is the reason why regular governmental funding is needed. The system of the authority budgeting has to be restructured as it is outdated and does not correspond to the requirements of the airport (Kaps et al., 2018). As a solution to this problem, it can be observed that the new types of expenditures have to be included in the Airport Improvement Program. For example, among should be the costs on transportation of the passengers, the improving of the waiting area, the functioning of the luggage department. The financial assistance should not be concentrated only on the safety of the airport, but also on the comfort of both visitors and workers.

Another significant issue is the unfair distribution of material support among various airports. First of all, it is possible to assume that local airfields do not have such an impact on the income from tourism as the large ones. That is why they have less assistance from the authorities; and it leads to the problems with safety and comfort of the passengers in this environment (Tang, 2019). In this case, the solution is to change the system of distribution of material aid in general. It should not depend on the income that the airport has or its strategic role but should be equal according to the needs of the facility.

The smaller airports have fewer runways, so they need less money for their repair. Moreover, it is crucial to point out that the lack of budgeting may lead not only to the problems in the airport but to more significant consequences. As an example, there was a case in France some years ago: the local airport did not have enough funding and could not afford the noise abatement (Bulle, 2020). The habitants of this zone acted against the functioning of the airport and attracted the attention of press and media. This situation is a clear illustration of what can happen if the budget is distributed in an unfair way. The problem of the local airfield in the French province turned out to be a crucial problem for the society and caused protests in many cities of the country (Bulle, 2020). The citizens even made block posts near the airport, and now this area is known as the Zone to Defend.

The purpose of creation of the airports also has to be taken into account. The organizations that have a strategic or political role are better funded than the others (Tang, 2019). On the one hand, it is a logical decision that aims to improve the airports which are used by the politicians or are important from the military point of view. On the other hand, it leads to the lack of material assistance to other environments and causes the risks in the safety of the passengers and workers. What is more, another consequence of the imperfections of the Airport Improvement Program is the airport congestion. There are two main solutions to this issue: the construction of new airports or the expansion of the existing buildings (Tang, 2019). It is possible to assume that these ideas require supplementary financing. The best option in this situation is to modify the actual way of distributing the money in order to keep the current level of comfort and safety and, at the same time, create new airfields. It is also advisable to renovate the budget of the authorities in general: a more considerable part should be assigned for the transport.

The modern system of governmental material compensation is outdated and needs to be renovated. However, privatization is not the best option as the investments cannot be equally distributed among all the participants and are not supposed to be predicted in long-term period. The priority aim of the funding is the safety of the passengers, but the level of comfort and service is not taken into consideration that leads to a negative perception of the airport. The political and strategic role of the airport should not be the reason to spend more money on it. More help and support have to be provided to local environments in order to avoid such a situation as the appearance of the Zone to Defend in France. The airport congestion can be solved by reallocation of the funding towards the expansion of the facilities.

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References

Bulle S. (2020). A Zone to Defend: The utopian territorial experiment of Notre Dame Des Landes. In B. Frère & M. Jacquemain (Eds.), Everyday Resistance (pp. 205–228). Palgrave Macmillan.

Cruz, C. O., & Sarmento, J. M. (2017). Airport privatization with public finances under stress: An analysis of government and investor’s motivations. Journal of Air Transport Management, 62(1), 197–203. Web.

Kaps, R. W., Myer, D. A. N., Lanman, R. T., & Sigler, J. (2018). The need for airport funding. The Collegiate Aviation Review International, 19(1), 71–91.

Sargent, M. (2016). End of the runway: Rethinking the Airport Improvement Program and the federal role in airport funding. Heritage Foundation, 31(2), 2–15.

Tang, R. Y. (2019). Financing airport improvements. Congressional Research Service, 15(1), 2–27.

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BusinessEssay. 2022. "Analysis of Airport Governmental Funding." January 14, 2022. https://business-essay.com/analysis-of-airport-governmental-funding/.

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