In a somewhat ironic twist on the Federal Aviation Administration’s (“FAA”) usual position, on March 26, 2018, FAA ruled in favor of the Town of East Hampton, New York (“Town”), proprietor of the East Hampton Airport, in a challenge by the National Business Aviation Association (“NBAA”) under FAA regulation 14 C.F.R. Part 16, to the expenditure of airport revenues in defense of the Town’s self-imposed airport noise and access restrictions.
Many in the aviation community have been monitoring the progress of Chicago’s efforts to privatize Midway International Airport (MDW) under the Federal Aviation Administration’s (FAA) Airport Privatization Pilot Program. The City faces a July 31, 2010 deadline to either select a private operator for MDW or seek an extension of the City’s slot in the Program from the FAA. Chicago is the only approved applicant for the Program’s only large-hub slot. If the application is approved, MDW would be the first privatized large-hub airport in the U.S.
The Airport Privatization Pilot Program was established in 1996 by Section 149 of the Federal Aviation Administration Authorization Act, which added a new Section 47134 to Title 49 of the U.S. Code. Section 47134 authorizes the Secretary of Transportation and, through delegation, the FAA Administrator, to exempt a sponsor of a public use airport that has received Federal assistance from certain Federal requirements in connection with the privatization of the airport by sale or lease to a private party.
If you own a commercial airport that has accepted federal grants and you have sold all or part of the airport’s property, you, no doubt are aware of the provisions of 49 U.S.C. § 47107(l)(5)(A). That provision of the Federal Aviation Reauthorization Act of 1996, as amended, limits any request to recoup capital an operating costs from the sale of airport property to those expenses that occurred within 6 years after the expense has been incurred:
any request by a sponsor or any other governmental entity to any airport for additional payments for services conducted off of the airport or for reimbursement for capital contributions or operating expenses shall be filed not later than 6 years after the date on which the expense is incurred
49 U.S.C. § 47107(l)(5)(A). That new terminal that the City spent $1 million out of its General Fund on seven years ago? According to § 47107(l)(5)(A), you cannot recoup the expense now. Those operating deficits that the airport has been running for the past ten years that the City has covered? Only the last six years can be recouped. Although you may not be planning on selling all or part of the airport now, or even five years from now, it makes sense, because of § 47107(l)(5)(A) to ensure that the owner’s expenses are currently being paid by the airport by requesting reimbursement on a timely basis.