Airport Governance Structures and Their Impact on Financial Strategies

Various types of ownership exist for public-use airports in the United States. Examples of common airport sponsor organizations are:

• States, counties, and municipalities
• Port/Airport authorities
• Governmental agencies (such as the National Park Service)
• Private owners who make reliever airports available for public use

Most U.S. airports are operated as not-for-profit entities – as public agencies within a county, city, or state government.

Regardless of which branch of government the airport operates under, managerial structure follows the “enterprise fund” concept. Enterprise funds are divisions of public agencies that generate revenue to cover some or all of their operating and capital costs. Airports that use public funds are owned by the taxpayers, who elect representatives (such as city councilors and county commissioners) to act in their interest. These elected officials are responsible for the oversight of the entire jurisdiction, so they appoint boards and/or managers to run the departments. The airport manager may report directly to the elected officials, or may report to the director of a department. For example, the airport manager may report to the director of public works or, in the case of an airport authority, may report directly to the authority.

The airport manager is not generally an elected position, but an employee of the public agency that owns the airport. The airport manager seeks approval from elected officials on capital expenditures in excess of a certain dollar amount. Capital and operating budgets are subject to an annual review and approval process from the airport sponsor. This review and approval process is an important step in establishing the credibility of your airport in the public forum and sets the stage for your airport’s financial relationship with the community it serves. The budget review and approval process is particularly important when the airport does not generate sufficient revenue to cover operating and capital expenses and requires general fund support. An airport manager who is well informed with regard to the airport’s financial position will be able to express this knowledge confidently to the appointed and elected officials who approve the airport’s operation and capital budgets. By so doing, he or she will engender confidence with decision makers that the airport is under proper stewardship, that the airport leaders are making wise financial decisions and that further support for airport programs is warranted.

There are three core forms of airport governance structure. These can be generally classified by the airport’s level of governmental power or taxation authority, and many airports across the country are a hybrid of two or three. The type of governance has a direct bearing on the financial mission of the airport and the potential funding streams. The three types are described in Table 1 Types of Airport Governance Structure.