Earlier this month, Jim Kenney appointed Chellie Cameron as new CEO for PHL International Airport. It sounds kind of odd that a mayor would have the job of appointing a CEO, given that airports are major business centers and quite a bit different from other city-regulated services like schools and libraries. But the concept of a publicly owned and operated airport goes back to the 1920s, when all a city needed for an airport was a large empty field and some serious financial backing for what was then a guaranteed loss of money.
And in a nutshell, that’s why PHL is still owned by the city of Philadelphia. Here’s who the airport’s executives report to and how Kenney is doing things differently than Nutter when it comes to the friendly skies above the City of Brotherly Love.
So it’s normal for an international airport to be owned and operated by a city?
Absolutely. Janet Bednarek, a Dayton University professor and author of several books about airports, flight and city development, said every major airport in the country is owned and operated by a city, county or public authority. New York’s airports, for instance, are run by the Port Authority. The only significant outlier is the airport of Branson, Mo., which opened just a few years ago and is owned by Branson Airport, LLC.
How did cities got involved in the airport business?
It goes back to the days of airfields. In the 1920s, a little over a decade after the Wright Brothers’ first flights, cities started building airfields largely for mail delivery. There was basically no business to speak of. An airport was something that a city needed to get on the map. Bednarek compared them to the railroads of the 19th century. Every city needed one for the good of its public. Commercial airlines didn’t start popping up until the ’30s and ’40s.
Cities also provided the necessary maintenance. Back then, a private enterprise would have struggled to take care of the airport grounds and wouldn’t have been interested even if it could because of the lack of ability to make profits. In the ’50s, when air travel became more common for the general public, airports started making money.
Philadelphia got its first airport in 1925. It was owned by the city and on the same land PHL is now.
If the city owns the airport, are my taxes paying for it?
No. The airport is self-sustaining. Its operating budget has lately been $400 million-plus, but none of that money comes from the city’s general fund. Every dollar taken in by the airport must either be saved/invested or spent on the airport. PHL gets its revenues by charging airlines for things like gate space and landing fees. It also receives grants from the federal government.
Why do cities want ownership of airports?
They’re not a money-losing proposition anymore. PHL’s economic impact to the region is estimated to be at around $14 billion and it supplies around 50,000 jobs. The more nonstop flights from major cities coming into the region, the better it is for a city’s business landscape. Under Nutter from 2008 to 2014, PHL added nonstop service to seven new cities and four new airlines. The airport had not added a new airline at that point since 2004.
“Airports are seen as a key economic development tools,” Bednarek said. “Cities will woo airlines to come in and provide service.”
Bednarek said a lack of direct flights to a given city can doom the business community. In her hometown of Omaha, she said ConAgra moved its international headquarters in part because of its lack of international flight offerings. The same happened with Chiquita in Cincinnati.
How does the relationship between the airport and city government work?
The airport’s daily operations have little to do with the city, but major decisions must be approved by city leaders. City Council, for instance, voted earlier this year to approve a new lease and raises for certain employees.
Under Nutter, the airport CEO reported to the Mayor’s Office of Transportation and Utilities. It will be different under Kenney. In accordance with the city charter, the CEO will report to the Commerce Department, which has the purpose of promoting and developing business opportunities in Philadelphia.
Could PHL ever be privatized?
It’s unlikely that it would happen anytime soon here or anywhere in the United States. Airports in England have been privatized, but no momentum to do the same exists here. Bednarek said cities like New York, Chicago and Los Angeles have talked about privatizing their airports at least to some extent but no deals have ever been made. The FAA is also not a proponent of privatizing airports.
“They’re like our interstates,” she said. “They are necessary to a national and even international system.”