Leases: Airport Property as revenue stream for airports

Airports have become exceedingly more expensive to operate over the last decade. Whether it be construction costs, maintenance expenses and dozens of other increases, airport operators find it necessary to find additional revenue streams. The most popular revenue generators, according to the FAA, are hangar leases. On average, hangars of various types generate more than 90 percent of revenue for general aviation airports.

The FAA says that airport development and property management planning ensures a long-term plan for non-airline revenue. Having a plan benefits the future of the airport as well as airport users and tenants because it provides working capital to help with safety improvements and enhancements to the airport.

The first step in developing your plan is to review and pay close attention to FAA Grant Assurances that
may be tied to revenue you have already collected for the airport. In many instances, Grant Assurances will play an important role in drafting leases as many of the assurances affect the leasing process. Often conditions contained in these assurances will affect what you can and cannot do in administering a lease.

According to the FAA, the airport business is a real estate business. If the airport is prime real estate, it commands a premium price. There are many rewards to developing your airport and quite a bit of leeway in how you choose to develop your property. You can decide whether to hire a third party to develop your property, do it yourself or a combination of both.

Of these rewards, increased revenue can make a difference to your airport’s bottom line. On top of that, your development will likely create jobs, giving the local economy a boost. Positive media coverage will enhance the image of your airport and can lead to more users, more fuel sales and even attract new tenants to your airport.

The FAA suggests your first step should be an evaluation or assessment of your current leases. Carefully looking into your current situation and planning for the future will assist in the revenue growth process. You should always know which properties will be expiring and falling back into airport
It will help you when you know how your property is transitioning in order to stay competitive in the marketplace.

Though there are several ways that airports can creatively generate revenue, property and hangar leases are among the most lucrative when the needs of the airport and community are represented in the airport’s leasing strategy.