AviationPros Podcast: The Today and Tomorrow of Aviation Infrastructure
March 5, 2021
O’Melveny project finance and development partners Eric Richards, Denise Raytis, and Elizabeth Dubeck joined the AviationPros Podcast to discuss the current state of airport infrastructure in the US, the impact of President Biden’s Build Back Better plan, and the future of the aviation industry post-COVID-19.
On the current state of airport infrastructure, Richards had two descriptors—“uncertain” and “stressed.” Questions continue to circle regarding when air travel demand will return and how air transit will differ from pre-pandemic norms. While aviation has seen its share of changes, from transitioning to a hub-and-spoke system to post-9/11 security overhauls to international alliance building, Richards told AviationPros that the pandemic represents “the greatest and most sustained period of uncertainty” the industry has seen,” undoubtedly meaning “more change to come.”
Some of the risk created by that uncertainty is being mitigated by a change in the overall framework for airport funding, the partners noted. Traditionally users have underwritten airports, accepting the bulk of the risk in exchange for more say in infrastructure development, but the model has shifted over time and others, like private investors, have entered the equation, diluting risk for commercial airlines.
For Raytis, the “bottom line” is the necessity for flexibility in meeting the demands of the market. The push toward airport footprints that provide more airside space and less pre-check-in square footage will only increase as travelers require additional pre-boarding social distancing space.
With an infrastructure predominantly dating back to pre-WWII, US airports were already long overdue for an overhaul. Raytis recalled comments made in 2014 by then-Vice-President Biden, who described LaGuardia’s Central Terminal in New York as a “third world country,” and “didn’t get a lot of opposition in that observation.” Seven years later, Dubeck remarked, there is reason for optimism under now-President Biden. “There have been references in some of Biden’s campaign plans to a competitive grant model introducing a new funding source that can potentially drive funds to the most efficient and most beneficial projects across the country,” she said.
AviationPros Podcast listeners can hear the full episode here.