‘Windfall’: Funding formula allows some small airports to cash in big on stimulus money

By  | 

(InvestigateTV) – Funding intended to keep America’s airports running and their workers employed throughout the coronavirus pandemic will disproportionately help some facilities that see only a few thousand passengers each year.

Some airports are about to see a huge stimulus check, enough to support decades of their current operating costs. But others will see only a few months' worth. (Source: InvestigateTV)

The funding formula and subsequent allocations are leaving some airport administrators and operations experts scratching their heads.

The Devils Lake Regional Airport in North Dakota, for instance, is set to get $16.9 million through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The town of around 7,000 people boasts a yearly ice fishing tournament and top-notch hunting and outdoor recreation. FAA data shows its airport had around 6,600 passengers board flights in 2018.

The grant money would be enough to sustain Devils Lake’s current operations budget for almost 50 years, according to analysis provided to InvestigateTV by longtime airport consultant Mark Sixel.

Other airports, some with thousands or even millions more passengers each year, are projected to receive only enough money to sustain operating expenses for three to four months.

All told, more than 3,000 American airports are set to receive shares of the $10 billion in grant funding from the treasury’s general fund.

The goal, according to the FAA, is to keep airports in safe operation, workers employed and airport credit ratings stable.

Last week, the FAA announced the allocations.

Some facilities are getting meager amounts in the scheme of the entire program – allotments of $1,000-$30,000. Many of those 2,000 or so getting the small checks are tiny local airports that cater to small, personal planes and have no air traffic control towers.

Other major airports like the international hubs in Atlanta, Los Angeles, and Dallas-Fort Worth are set to get around $300 million or more.

The most puzzling numbers to airport insiders come from the airports operating in the middle – those with major carriers but that offer primarily regional flights.

Some airports on deck to receive thousands of dollars per passenger – others few than $10

In the panhandle of Idaho, the Lewiston-Nez Perce County Airport is projected to receive $1.2 million in grant funding.

The area is just along the border with Washington, and under normal circumstances, more than 30,000 college students go to school within an hour’s drive of the airport.

The area also isn’t easy to get to by car. So it’s not surprising that nearly 60,000 passengers used the airport in 2018.

“We’re in a geographical area where air service is incredibly competitive,” said Gary Peters, Lewiston airport’s board chairman.

The math shows the grant will equal about $21 per passenger in Lewiston. That money alone could sustain the current operations budget for about a year and a half. But it pales in comparison to some other airports’ allocations.

“To go out and compete for those kinds of dollars, it’s really going to make it tough for us going forward. And it’s really frustrating the fact that maybe we were put at a disadvantage with our own tax dollars,” Peters said.

Just across the border in Washington, InvestigateTV found the Pullman airport, with about 10,000 more passengers a year than Lewiston, is set to get $18 million in funding. That’s around $272 per passenger and enough to sustain 22 years of operations.

The airport that serves the resort area of Sun Valley, Idaho is also expecting around $18 million in funding. Meantime in the state’s capital city, Boise airport’s allocation is about the same – but for 1.8 million more passengers boarding planes annually.

“It’s hard to not be upset. It’s surprising. It’s disappointing for sure,” Peters said of the overall distribution.

The Pullman airport did not respond to requests for comment before publication.

In Iowa, the Dubuque Regional Airport is set to receive $1.2 million – which is the equivalent of sustaining its operating budget for just over three months. The Mason City airport, with 30,000 fewer annual passengers, is set to receive $17.5 million – enough money to sustain operations for almost 29 years.

Looking at all airports on the list to receive more than half a million in grant funding, the Northern Colorado Regional Airport in Fort Collins stands to get the most money per passenger - $6,645.

Other airports to receive more than $3,000 per passenger include Topeka, Kansas and Kearney, Nebraska.

On the other end of the spectrum, of those airports getting more than $500,000, the Charlotte airport in North Carolina, John F. Kennedy International Airport in New York City, and Newark, New Jersey’s airport all stand to get less than seven dollars per passenger.

Funding disbursements based on calculations that benefit low-debt airports

When InvestigateTV asked the FAA about the distributions, the agency responded by sending the funding breakdown and said the number of passengers “is only one of several metrics used to determine an airport’s business and financial situation.”

That’s true. But a longtime airport consultant said the formula has a mistake in it – one that’s added up to unfair funding, particularly for small and mid-sized airports.

“The allocation doesn’t make much sense to me. The distribution of the $10 billion was welcome and needed, but it didn’t get to the right airports,” said Mark Sixel, who specializes in consulting with airports to determine new routes.

Here’s how most of the funding distribution (nearly $7.5 billion of the total $10 billion) is calculated: Half of the formula is related to passengers, specifically how many people boarded flights at each airport. The other two quarters of funding calculation were related to money – how much debt the facility holds and how that number relates to cash reserves.

Sixel said the problem is with that last piece – the ratio of cash reserve to debt.

“There were some errors in the math I think that could easily be corrected,” Sixel said.

He said the problem is when an airport had a little bit of money and zero debt, the division spit out an error. For example, even $1 in the bank divided by $0 debt will not compute. From there, Sixel said the FAA put in an artificial number to remove the error.

The result: Millions of dollars in extra funding added to the allocation.

“If you had one dollar in your bank account and zero debt, you ended up with about $17.5 million in additional funds into your grant program,” Sixel said.

Devils Lake in North Dakota is one such example. It showed no debt and about $117,000 in the bank.

“They have very low expenses, which is good for an airport. They’re very well-run, very well-managed in North Dakota. Very conservative budget-wise. But they ended up with $17.5 million from this grant program,” Sixel said. “Because they had no debt and had a little in their bank account.”

The Devils Lake airport did not respond to a request for comment. The airport director in Fort Collins, where of high-dollar checks the most money per passenger is going, responded to InvestigateTV’s request for comment. He would only say passengers are only one part of the equation and pointed to the funding formulas.

While some airports are currently set to receive enough funding to last decades – there is a four-year limit on spending the grant money. The FAA can take any unused money back at the end of that time period.

“If this holds, the airport will be able to spend that money on anything you can lawfully spend money on for an airport, including upgrades, runways, infrastructure, things like that,” Sixel said.

Before the money is released, Sixel said this should change – and the calculation of the debt formula should be fixed.

“I think that the FAA was working through this so quickly to get the money out the door so fast with 3,000 plus airports they had to deal with to get these grants put together within a few days. Congress wants the money out the door. The airports need the funding to keep their operations going. It was just a mistake in the math, and it wasn’t caught before the grants were awarded,” Sixel said.

Sixel said the intent of the program was that each facility would get around seven to eight months of funding.

If there is no change, airports like those in Casper, Wyoming and Columbus, Georgia – and even JFK and LaGuardia in New York City - will only get enough money to equate to three or four months of operating costs.

In Idaho, Peters said he hopes there will be a fairer distribution.

“Just fair is all we ask,” Peters in Lewiston said. “It just needs to be a level playing field. That was the whole point behind the CARES Act, if I understand it correctly, was to allow airports to remain healthy and fund their operations. It wasn’t to give any one airport a windfall.”

The FAA did not respond to InvestigateTV’s direct questions about the debt-to-cash ratio calculations.

Copyright 2020 InvestigateTV and Gray Media Group, Inc. All rights reserved.

Explore the map below to see how much money is set to go to airports allocated more than $500,000 of CARES Act funding. The size of the circles represents the amount of funding when compared to the number of passengers who boarded planes in 2018, which is the number that accounts for the largest portion of the funding calculation. Click on circles for more information on each airport. (Data Sources: FAA and Sixel Consulting Group. Data Visualization: Jamie Grey)