Embracing Alternative Funding for Airport Infrastructure
In our society, technology, climate and social norms are changing rapidly. Project delivery methods are changing as well — more rapidly than at any point in history. These changing delivery methods have the potential to provide new options for funding improvements to our nation’s infrastructure. With the decades-old gap in public funding, alternative methods to finance these projects are becoming a realistic option, whether in our cities or in other critical areas, like aviation. There are many models of alternative funding that complement the traditional publicly funded and financed methodology using private money to create new and expanded infrastructure.
Alternative delivery methods like design-build-finance and privately financed partnerships require alternative funding, which typically comes via private financing. Private financing allows options for repayments that can be based on a negotiated return on investment, not operational fees or revenues. Any excess revenue is distributed back to the public entity that controls the facility rather than the private financier. These funds can be used for other infrastructure projects, providing a multiplier effect on initial investment dollars and become springboards for additional transformational projects.
Today’s airports are complex entities that contain duplicate microcosms of all the infrastructure that lives inside our cities. With air travel projected to double worldwide over the next 20 years, one of the biggest challenges airports face is being able to improve and expand infrastructure to accommodate the increased passenger load, required redundancy and technology demands. Because airports are similar to cities, those at the forefront of the smart movement are testing new solutions.
These forward-thinking airports require infrastructure that supports their efforts to provide technology simultaneous to achieving increased resiliency. Transitioning today’s airports into smart airports requires a digital transformation through investment in IT infrastructure and operational systems. While traditional infrastructure dollars are focused on maintaining and improving the elements that are critical to daily operations, this leaves limited funds to support growth and causes airports to struggle to find funding dollars. This is where alternative funding can expand possibilities.
Although recent gains in private financing projects is mainly at a large scale, using private financing on a small scale can be a catalyst to kick-start further smart projects as part of an overall airport infrastructure or digital master plan. Simple projects, like replacing terminal and airfield lighting with more energy efficient alternatives, provide a sustainable solution that uses less energy and therefore reduces operating costs. These savings can be reinvested in digital transformation-enabling elements like Wi-Fi, technology infrastructure and internet of things (IoT) sensors that, in turn, provide a springboard for improvements in operational efficiency, customer experience and sustainability as passenger demand grows along with the aviation industry.