Getting Resilient With Financing

With the decades-old gap in public funding, alternative methods to financing these capital projects are becoming a realistic option, whether in our cities or in other critical areas, like aviation. Fortunately, there are many models of alternative funding that complement the traditional publicly funded and financed methodology, utilizing private money to allow for the creation of new and expanded infrastructure.

Utilizing Alternative Project Delivery

Alternative delivery methods, like design-build finance and privately financed partnerships, require alternative funding, which is typically provided via private financing. Private financing offers options for repayments that can be based on a negotiated return on investment (ROI), not operational fees or revenues. Any excess revenue is distributed back to the public entity that controls the facility rather than the private financier. These funds can then be used for other infrastructure projects, providing a multiplier effect on initial investment dollars and becoming a springboard for additional projects.

Funding Smart Airports for Resiliency

Today’s airports are complex entities that contain, in duplicate, microcosms of all the infrastructure that exists inside our cities. With air travel projected to double worldwide by 2035, one of the biggest challenges airports face is the ability to improve and expand this infrastructure to accommodate the increased passenger load, required redundancy and technology demands.

Because airports and cities share common systems, those at the forefront of the smart industry are testing new solutions akin to the smart cities movement. These forward-thinking airports require infrastructure that supports technology upgrades while simultaneously achieving increased resiliency. Rethinking what is possible with alternative funding can lead to increased resiliency through the utilization of dual and diverse utility feeds or emergency power generation, which is required by utility distribution and caused by operations or extreme weather events.

Transitioning today’s airports into the smart airports of the future requires a digital transformation, achievable through investment in IT infrastructure and operational systems. Unfortunately, alternative delivery of financed projects can create an artificial roadblock by implying that a lower-quality product will be implemented when private dollars are utilized. This idea favors the perceived need for maximum ROI without consideration for the long-term or operational quality required by resiliency projects. This, however, does not have to be the case.

Maintaining Operational Resiliency

With a keen eye on the creation of high-quality standards and performance criteria, quality can be maintained even in an alternatively financed project. While traditional infrastructure dollars are focused on maintaining and improving the elements that are critical to daily operations, this leaves limited funds to support growth, making funding difficult to find for airports. This is where alternative funding can expand possibilities.

Although recent gains in private financing have happened mainly at a large scale, utilizing private financing on a small scale can be a catalyst to kick-start smart projects as part of an overall airport infrastructure or digital master plan. Simple smart solutions, such as upgrading or expanding Wi-Fi and mobile access, will enable the delivery of expanded mobile content, reducing labor and providing operational efficiencies. These savings can be reinvested in digital transformation, enabling elements like facilities monitoring via sensors and conservation projects — such as smart metering — that can help provide proof of concept of a large-scale implementation at low or no cost to the taxpayer.

Meeting Passenger Demand

As passenger demand grows alongside the ever-expanding aviation industry, the need for resilient, smart airport assets increases, calling for more creative funding to get these projects off the ground. Today’s forward-thinking airports can utilize alternative financing to jump-start improvements in resiliency, operational efficiency, customer experience and sustainability as we head into the future.