RECORD KEEPING

Now that municipal governments are sending their financial statements to the State Auditor’s Office, and they are available online, some interesting information can be obtained.  For instance, the city of St. Clair spends almost as much money to insure their airport as the city of Columbia Missouri, Which by the way has scheduled airline service.  Columbia Mo was also the only one out of the thirty that were looked at, that listed the rental income from farming leases.   

About half of the cities that were reviewed, listed their airport as a business type activity.  Others listed the airports as another account like streets and police.  One thing that they all did was to use traditional accounting for untraditional activities.  One auditor actually reported that the airport sponsor was in violation of a state statute, because the airport was not self sustaining. 

All of the audits of airports that have received Federal Funding recently, have shown the airports to be losing money.  Some of these audits also listed huge amounts of depreciation charged to the Federal Awards.  One auditor separated out capitol and operating expenses and this makes a huge difference.   Longer runways are being built all over the country, and are costing airports a lot of money, and sponsors are spending this money for several reasons.  One it is there, the money is out there for the asking.  The FAA thinks every airport should have longer runways with a minimum of 4000 feet.  Sponsors also think they will attract larger aircraft to their airport, sell more fuel make more money. 

So this capital improvement craze has cost some sponsors a lot of cash.  This also presents a situation!!  One of the auditors concluded that with the capitol improvement cost associated with the airport, hangar rent should be raised to offset the increased cost.  This brings up capitol vs. operating cost.  For example, an airport with thirty single engine aircraft and two twins, all capable of operating out of a 3000 foot runway.  The sponsor and the Feds want 4000 feet or more to attract the bis jets that they have seen at other airports with the long runways.  That’s fine, but don’t place the cost on the tenants that don’t need a longer runway.  Impose a landing fee on non tenants that need a 5000 foot runway. 

After reading about twenty or so audits of municipalities with airports, the conclusions are that there is no uniform method for airport finance reporting.  There is little to no experience in airport operations evident in these reports.  There is almost no evidence of knowledge of the FAR’s.   It would be impossible to get a clear and precise picture of the financial condition of any of the airports that were reviewed.  One exception was Lee’s Summit Missouri.   Lee’s Summit is an exceptionally well run operation, as should be a target for every other operator out there.

One other point here.  Agricultural lease and leases of airport property.  There appears to be a lot of airports that have farm ground that is being used for crop production.  If you are an airport tenant, and your airport has crop land around the airport, get the numbers from the sponsor.  Municipal governments that are airport sponsors that are not familiar with the FARs have tendency to deposit farm ground rent on airport property into their general fund.  Check them out.