Legal Impediments to Airport P3s in the United States

Abstract

The financial and regulatory structure for airports in the United States places the Federal Aviation Administration at the center of a complex and sweeping regulatory scheme that imposes pervasive oversight over the nation’s airport infrastructure. The agency regulates airports primarily based on contractual agreements tied to federal grants, functionally ensuring the nation’s airport infrastructure is continually subject to cradle-to-grave regulatory oversight. These grants are typically funded by airline ticket taxes but in current-dollar terms, money available through federal grants has been declining; at the same time, airports face a dire backlog in capital investment in airport infrastructure. As a result, new and creative funding structures, like public-private partnerships, are gaining traction. But with federal regulation touching nearly every element of airport operation and financing, airport proprietors who want to take advantage of creative funding opportunities face a daunting task. Proprietors and potential investors must navigate a vague, intricate, and changing federal regulatory landscape coupled with myriad state and local laws—a hurdle that may prove too much for potential investors, especially those unfamiliar with airport financing.