IN THE PUBLIC EYE

The Impact of Airports and the Increasing Need to Invest in Infrastructure

Author: Felipe Garcia & Daniel Rettura, Alliant Public Entity

 

Airports play a crucial role in the U.S. economy by:

  • Stimulating the travel, trade and tourism industries
  • Supporting millions of jobs
  • Contributing substantially to the GDP

 

According to Airports Council International, a recent economic impact study covering 487 commercial service airports nationwide shows that they support around 12.8 million jobs, generate $619 billion in annual payroll and produce more than $1.8 trillion in annual output. These jobs are linked to airport activities like operations, ground handling, ticket sales, security, terminal services and car rentals. Additionally, visitor spending creates jobs in the hospitality sector, including positions in hotels and restaurants. Jobs tied to capital improvement projects at airports—such as those for engineers, architects, consultants and construction workers—further contribute to the economy. This leads to a "multiplier effect," as funds circulate through the local and regional economy, eventually spreading to the broader national economy.

 

Airports serve as key hubs for both passenger and cargo transport, connecting people and businesses both within the U.S. and globally. The aviation industry is currently experiencing heightened demand, prompting the need for airport upgrades and expansions to improve the passenger experience, reduce costs and ensure efficient and safe operations.

 

To enhance the travel experience and keep airfare affordable, it’s essential to invest in modernizing terminals, airfields and other critical infrastructure, including utility systems and technological platforms. Federal grant programs have been instrumental in building and maintaining safety projects in U.S. airports to meet growing flight demand. In their Airport Infrastructure Needs Study, Airports Council International reported that U.S. airports will need $173.9 billion in infrastructure investments over the next five years, a significant increase from earlier estimates. This reflects rising construction costs, new facility requirements and the complexity of projects, particularly in major metropolitan areas.

 

Maintaining and upgrading airport infrastructure is vital to meet rising demand. Without these investments, the consequences could extend beyond inconvenience, affecting both businesses and travelers in unique ways. For example, airports may experience a consequential impact on  their loss experiences and  insurance programs (i.e. increase in premiums). Insufficient funding for infrastructure leads to delays in necessary improvements and expansions, along with deferred maintenance. Airports Council International estimates a $13 billion annual shortfall in infrastructure investment, based on 2024 figures (which are likely to increase). It suggests that inadequate funding causes critical infrastructure failures, aging facilities, poor customer service, maintenance instead of replacement, airline delays and reduced overall capacity. These issues will negatively impact economic activity, leading to job losses and decreased production.

 

Federal grants have been key to helping U.S. airports build and maintain essential safety and capacity projects. However, airports require more flexibility to self-fund their infrastructure needs. The Airport Infrastructure Needs Study notes that the Passenger Facility Charge (PFC) user fee has lost effectiveness over the past two decades. Updating the PFC cap and adjusting it for inflation would better align user fees with the true cost of maintaining state-of-the-art airports. Such policy reforms would help expand funding flexibility, giving airports the resources they need to thrive.

 

It’s essential that our airports remain reliable centers for travel and commerce, driving job creation and supporting our economic and environmental goals. Long-term neglect of airport infrastructure could have significant consequences, but strategic investments can address inefficiencies, promote growth and pave the way for a better future.

 

At Alliant, we help our airport clients effectively navigate this evolving aviation landscape. Our team of specialists provide tailored risk transfer solutions to address today’s greatest challenges, ensuring businesses like yours have the necessary safeguards in place to stay ahead of emerging risks and maintain a competitive edge.

 

If you would like to learn more about our expertise, specialized resources and experience working with the largest airports across the country, please reach out to our airport risk management specialists within Alliant Public Entity: Daniel Howell & Felipe Garcia