January/February 2024 - 40

AIRPORT GURU
AUTHOR Curt Castagna
Navigating Airport Land Use
Regulations to Grow
Non-Aeronautical Revenue
BOTH COMMERCIAL service and general
aviation airports play a vital role in our
nation's air transportation system - providing
freedom of mobility, attracting investment
and generating local employment.
In addition to connecting small communities to the
nation's transportation network, general aviation airports
support vital firefighting, air ambulance, humanitarian and
other public service missions benefiting the public.
Today, general aviation airports are under increased pressure
from political and community stakeholders to advance
environmental sustainability and decrease the impacts of
airport operations on the communities they serve - all
while meeting the federal requirement to maintain financial
self-sustainability.
Strategies To Increase
Non-aeronautical Revenue
Airports seeking to increase revenue have several options
to consider, such as raising rates and charges, collecting fuel
flowage fees and developing revenue-producing facilities.
Another viable option is to attract private non-aeronautical
land development. This involves the leasing of airport
property for compatible commercial uses that are physically
separate from airport operating areas and unrelated to aeronautical
functions.
Using revenue from non-aeronautical sources to offset or
subsidize revenue from aeronautical sources decreases presABOUT
THE AUTHOR
CURT CASTAGNA
Curt Castagna, president and CEO of Aeroplex Group
Partners, is also president and CEO of the National Air
Transportation Association, the immediate past chair of the
Los Angeles County Airport Commission, and president of the
Van Nuys and Long Beach airport associations. A certified
private and instrument-rated pilot, he continues to instruct
courses in aviation administration at Cypress Community
College and Cal State Los Angeles.
sure on airports to impose higher lease rates on fixed-based
operator facilities and other aviation tenants to cover operating
costs. Non-aeronautical leases often take the form of
warehouses, light manufacturers, professional and technical
centers, and hotel and retail facilities.
An airport's ability to grow non-aeronautical revenue
depends on many factors, including its location, available
property, economic conditions and
customer demand. Airports with high
levels of aviation demand may market
property to aviation service providers
and develop aeronautical hangar, office
and maintenance facilities. Conversely,
airports with lower levels of aviation
demand may recruit non-aviation
tenants for other diverse uses.
It is important to understand
Types
of plans
AIRPORT
f Airport Master Plan
MUNICIPAL/
COUNTY
f General Plan
f Land Use Plan
f Specialized Area Plan
that airports establish lease rates for
non-aeronautical tenants based on fair
market value. The real estate appraisal
industry defines market rent as the
income a property would most probably
command in the open market by the current rents paid for
comparable space, reflecting all conditions and restrictions
of the lease agreement.
In contrast, airports establish lease rates for aeronautiFOCUSED
DEVELOPMENT
f
Airport Strategic Plan
f Airport Business Plan
cal tenants through an assessment of rental rates at similar
or competing airports. This is consistent with the Federal
Aviation Administration's (FAA) Rates and Charges Policy
to establish fair and reasonable rates and fees for aeronautical
property at airports. Market-based rental rates are derived
from similar airports throughout the immediate region, with
special attention to similar locational, physical and operational
characteristics.
As a result, airport sponsors typically collect higher lease
rates, and generate more revenue, from non-aeronautical
uses than from aeronautical uses. Aeronautical revenue is
often impacted by factors beyond an airport's control, such
as the broader general aviation industry's performance. Nonaeronautical
revenue, on the other hand, generates income
from diverse services and facilities.
40 \ AIRPORT BUSINESS / JANUARY/FEBRUARY 2024
January/February 2024

Table of Contents for the Digital Edition of January/February 2024
