Who Owns and Operates the Airport in Your City?

When we think of airports, we often think of vacation or work travel. We also think of it as a place we go to pick someone up that has come to visit us. We hardly ever stop to think about how airports work, we are just happy that they are there to take us to our destination.

My hunch is that if you ask the average person on the street who owns the airport in their city they will struggle with providing an answer. Some may guess and say "the city" and depending on the city, they may be right. However, airports are often managed by an "airport authority" that is publicly managed with a governing board of directors comprised of elected or appointed regional leaders.

I was curious about the top 10 US airports and who runs them, and created a quick reference table that also includes my hometown airport, San Diego:

Passenger wise, Hartsfield-Jackson Atlanta International Airport is the busiest airport around the country. If you're wondering how Atlanta has more travelers than New York or Los Angeles, don't forget that both New York and Los Angeles are serviced by 3 airports each: New York is serviced by JFK, La Guardia and Newark; and Los Angeles is serviced by LAX, Burbank and Long Beach.

While, Atlanta has the most passengers traveling through it, Chicago's O'Hare International Airport has the highest operating expenses even though it's only the 4th busiest airport:

It takes a lot to get airports running smoothly so that we can check in, get through security and make our flights in time for take-off. How airports are governed is just one piece of the puzzle. Airport management is impacted by various supply and demand factors and like the airline industry, airports were hit particularly hard during Covid-19 and are still bouncing back. McKinsey recently reported that during the pandemic "aircraft movements and passenger traffic...plummeted to less than half their usual volumes," and also resulted in airport concession stores closing permanently.

Even though government grants helped to soften the blow of the pandemic, they were only temporary relief measures and the decline in passenger and aircraft activity continues to have residual effects on airport cash flows. Now more than in pre-pandemic times, airports across the country are thinking about ways to diversify and increase their future cash flows to ensure they deliver seamless and safe travel experiences.

Drucker's Great Company Philosophy Applied to Cities

While running a city is somewhat different than running a company there are universal qualities in leaders that are transferable across the private and public sectors. Similarly, there are fundamental goals that the private and public sectors must always keep top of mind: the private sector is driven by maximizing profits, and the public sector is guided by maximizing public good.

In the private sector, companies sell goods or services to cover the costs to run their business operations and make a profit. In the public sector, cities use public revenues to pay for: "parks and recreation services, police and fire departments, housing services, emergency medical services, municipal courts, transportation services (including public transportation), and public works (streets, sewers, snow removal, signage, and so forth)." In the news we often hear that the public sector is funded by our "taxes," but local government revenue is a little more complex than that, it can come from "property, sales, and other taxes; charges and fees; and transfers from federal and state governments and municipal bonds.

Just like most companies seek to become great companies, most cities seek to become great cities, and just like some companies may get confused along their path, some cities do so as well. I recently re-read some classic Peter Drucker and saw how his advice to companies seeking to become great companies in his Management: Task, Responsibilities, Practices, also provides a cautionary tale for cities as cities levy to position themselves as the best cities to live, work and play in.

For the private sector Drucker asserts that "profit" is a strategic necessity rather than the ultimate end goal, when he said: "Business cannot be defined or explained in terms of profit...The concept of profit maximization is, in fact, meaningless...The first test of any business is not the maximization of profit, but the achievement of sufficient profit to cover the risks of economic activity."

Similarly, by just changing a few words to the classic quote here is my take on how we can apply this management concept to cities as they turn to local taxes to ensure that the revenue from those taxes can cover the costs to keep the city looking beautiful, maintain good roads and parks and have reliable utility services across the city: "Cities cannot be defined or explained in terms of city tax revenues from land use...the concept of city revenue maximization is, in fact, meaningless...the first test of any city is not the maximization of city tax generation, but the achievement of sufficient public good for all to cover the risks of economic activity."

Just for fun: if you're interested in seeing how your city's revenue sourced the Government Finance Officers Association has created revenue sources for cities with populations over 10,000 people.

A Free Summer Transit Treat in Coronado

Despite San Diego's amazing year long weather, there are a few extra treats we get during summer, like outdoor concerts and some free transit. One of my all time favorites is the free shuttle on Coronado Island that runs along Orange Avenue on the 904 bus route. We usually hop on at the Ferry Landing and head south on Orange Avenue until we get to the Hotel Del Coronado.

Part of the charm of the free shuttle is it's predictability, it runs every 15 minutes so need to worry that if you miss one that it's gonna take forever to get on the next bus.

The free shuttle is a courtesy of the City of Coronado has operated since 2013 except for 2020 because of covid. This year the city spent $192,312 to operate the shuttle, provide extra 904 service schedules and to distribute 1,000 MTS day passes to the Coronado Cays to help reduce vehicle traffic on the island during summer. In addition to being a fun summer perk the free shuttle, like other forms of public transportation, also helps to reduce parking demand and green house gas emissions, and incentivizes people to spend more by creating more opportunities for carefree foot traffic to discover the many shops on the island.

If you haven't tried the free shuttle, you have until September 5th to try it for free, after then you can still take the 904 along the same path. The only difference is that you're going to have to be a bit more aware of the bus schedule, since the 15 minute frequency is meant to support the increased summer traffic on the island, and pay a regular fare.