Obama readies for take-off

Though Barack Obama made history when he was elected America’s first black President, his name could live on for an altogether different reason – lifting the US and global economies out of the recession they find themselves in, argues aviation correspondent Michael Sterling.

The American election is over, the Democrats have won and Barack Obama is heading for the White House. The euphoria has come to an end and hard reality is setting in – the USA and the global economy is deep in a recession, which could possibly be the worst since in the Second World War.

The new president is promising to right the wrongs of the previous government, and economic stimulus is seen as the way to reflate the economy. The Democrats are already shaping and crafting a stimulus package that may become a windfall for transportation infrastructure, including airports.

Put simply, the US government has to pump money into the US economy to kick-start economic growth, and huge infrastructure projects, including airports, roads and other transport systems will be the main beneficiaries of this policy. Already the American Association of Airport Executives (AAAE) has started lobbying for money from this plan.

“Airport infrastructure needs have grown considerably in recent years. Congress can make substantial progress in addressing those needs, and create ten of thousands of high-paying construction jobs along the way,” says Chip Barclay, president of the AAAE.

Barclay is asking for lawmakers in the USA to help airport financing by changing existing laws, including changes to the tax code and the Federal Aviation Administration’s Airport Improvement Program’s funding levels – and he’s likely to get it, although the queue to Washington for financial help is a long one, with automakers hustling alongside a crestfallen Wall Street.

The figure being floated is US$1 billion for American airport construction projects with up to 35,000 new jobs being created (or saved).

Raise cash, reduce costs

Adding to the voice of the AAAE is the Airports Council International – North America, which represents airports’ governing bodies and wants US$600 million from the stimulus package.

“Airport operators have been working tirelessly with their airline partners to find ways to reduce costs to maintain air services. This has resulted in many capital projects being delayed so that rates and charges assessed to airlines can be maintained or even lowered,” says the group.

The way to assist airports here is through tax changes. Airports' funding-raising bonds could be exempted from Alternative Minimum Tax. Federal law classifies most airport bonds as private activity bonds, which means that the interest payments are subject to the tax. The argument is that these bonds raise money for facilities like passenger terminals, runways and taxiways that benefit the flying public.

Keep on moving

More than 3,000 ready-to-go transportation projects are being forwarded as part of the stimulus bill as it comes to the House Transportation and Infrastructure Committee.

However, the move to infrastructure spend is not uniquely American.

China has rushed forward a plan to spend US$4.4 billion on airport projects over the next four years through its Civil Aviation Administration. Emphasis will be on development in western China in an effort to thwart the current economic turmoil. In the UK, plans for upgrading London’s airports are in the pipeline with ambitious and controversial ideas for a new airport in the Thames estuary. Similar ventures are being planned across Europe and Russia.

While infrastructure will be key to pulling the global economy out of recession, there are no certainties that airports will be ahead of other infrastructure construction for government money. Indeed, the list of possible failures is growing by the day with some of America’s biggest employers, such as General Motors, needing state money to survive. We must hope that airports employ enough people to feature high on the pecking order for Capitol Hill handouts.
 

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