Airport Financial Feasibility Studies for Capital Programs
Pro forma analysis, rate covenant compliance, and the Report of the Airport Consultant
Prepared by DWU AI · Reviewed by alternative AI · Human review in progress
An AI Product of DWU Consulting LLC
March 2026
DWU Consulting LLC provides specialized municipal finance consulting services to major North American airports, aviation authorities, and municipal issuers. This article is part of the DWU AI research library, a collection of reference materials for airport finance professionals.
Scope & Methodology
This article examines the financial feasibility study as prepared in support of airport revenue bond issuances, with emphasis on analytical structure, pro forma financial modeling, rate covenant compliance, and the interaction with airline rate-setting methodologies. Analysis draws from published feasibility studies, rating agency credit opinions, bond official statements, and consultancy scope of work documents. Examples reference real transactions and disclosed public documents.
Bottom Line
A financial feasibility study (formally, the "Report of the Airport Consultant") is a required component of airport revenue bond official statements. It provides pro forma financial analysis demonstrating that projected net revenues will support debt service while maintaining covenant compliance and airline rates projected to remain below the large-hub CPE median of $22.40 (DWU analysis of published ACFR data, FY2024). Three firms—LeighFisher, Ricondo, and Unison—completed studies for 48, 11 large-hub, and 150 airports respectively in a GOAA evaluation (March 2025 RFP minutes). Rating agencies evaluate feasibility studies on enplanement forecast reasonableness, inflation assumptions, covenant calculations, and multi-phase program funding certainty.
What a Financial Feasibility Study Is
A financial feasibility study—formally titled the "Report of the Airport Consultant" when prepared in connection with a bond transaction—is a pro forma financial analysis that demonstrates whether an airport can fund a proposed capital program while maintaining compliance with its bond indenture covenants, preserving credit quality, and sustaining airline rates and charges.
The Report of the Airport Consultant provides the basis for rating agency analysis that underwriters and investors use for pricing and credit decisions. The feasibility consultant's opinion—that projected net revenues will be sufficient to meet the rate covenant and additional bonds test over the projection period—is the central finding of the study.
LeighFisher, Inc., Ricondo & Associates, Inc., and Unison Consulting, Inc. In a March 2025 evaluation by the Greater Orlando Aviation Authority (GOAA), LeighFisher reported completing 48 feasibility studies supporting $22.6 billion in bond issuance over a six-year period; Ricondo cited engagements at 11 large-hub airports; and Unison referenced 150 airports (March 31, 2025).
Why It Matters: The Scale of Airport Debt
U.S. airports carried $151 billion in outstanding bond par amount as of January 2, 2025, with $9.6 billion in annual aggregate debt service payments (ACI-NA, 2025 Airport Infrastructure Needs Study, citing Bloomberg data). ACI-NA projects $173.9 billion in airport infrastructure needs for 2025–2029, averaging $35 billion annually.
Each new bond issuance that adds to this debt load requires a feasibility study demonstrating that the airport can service the incremental debt while maintaining covenant compliance and airline costs.
Structure of a Report of the Airport Consultant
The Ricondo scope of work for Yampa Valley Regional Airport's Series 2026 Bonds (November 11, 2025) as outlined in Ricondo's scope for Yampa Valley Series 2026 Bonds (November 11, 2025):
| Chapter | Content |
|---|---|
| Letter and Summary | Introduction, overview of key assumptions, projections, and findings |
| Proposed Financing | Transaction details: legal structure, resolution terms, security pledge, rate covenant, additional bonds test, flow of funds, sources and uses of funds |
| The Airport | Governance structure, physical description, location, air trade area, competing airports, airfield/terminal/facility descriptions |
| Capital Program and Funding Sources | Multi-year CIP: project descriptions, estimated costs, construction schedule, funding sources (grants, PFCs, bonds, airport cash) with estimated amounts and cash flow timing |
| Demographic and Economic Analysis | Historical and projected economic/demographic trends in the air trade area: GDP/personal income, population, employment, major employers, tourism drivers |
| Passenger Demand and Air Service Analysis | Historical enplanement and air service trends; forecasts of future passenger activity derived from economic projections and known airline service changes |
| Financial Analysis | Review of airline use and lease agreements; historical financial performance; development of assumptions for revenues, expenses, and inflation; pro forma projection (5–10 years) incorporating proposed debt service; calculation of debt service coverage and covenant compliance |
The Yampa Valley engagement budgeted 666 labor hours and a fee not to exceed $199,000 ($204,000 with optional in-person meetings), with four report drafts—two preliminary, one rating agency draft, and one final for the Official Statement (November 11, 2025).
The Analytical Engine: Pro Forma Financial Projection
The financial analysis chapter is the core of the feasibility study. It projects the airport's revenues and expenses forward over a 5-to-10-year period and demonstrates two things:
- Rate covenant compliance — that projected net revenues in each year of the projection period equal or exceed the required multiple (typically 1.25x) of annual debt service on all outstanding bonds plus the proposed bonds.
- Additional bonds test satisfaction — that the airport can meet the ABT requirements in its master trust indenture, whether based on a historical test, a prospective (consultant certification) test, or both.
Building the Revenue Projection
Revenue projections begin with the airport's historical revenue base, segmented by source:
- Airline revenues: Landing fees, terminal rents, apron charges, loading bridge fees. These are a function of (a) the rate-setting methodology (compensatory, residual, or hybrid), (b) the projected activity level (landed weight, enplanements, gate utilization), and (c) the terms of the airline use and lease agreement.
- Non-airline revenues: Parking, ground transportation (TNC fees), rental car concessions (including CFC-backed facilities), food & beverage and retail concessions, advertising, property rentals, fuel flowage fees. Non-airline revenues are driven by enplanement levels, concession contract terms, and escalation formulas.
- PFC collections: Based on the authorized PFC level ($4.50) multiplied by projected eligible enplanements, net of the airline collection fee. PFC revenue may be applied on a pay-as-you-go basis or pledged to bond debt service.
- Grants: AIP entitlements, BIL AIG allocations, and any ATP competitive grants in hand reduce the bond-funded portion of the capital program but are not pledged revenues under the indenture.
Each revenue line item requires a disclosed assumption. The feasibility consultant derives growth rates from historical relationships between revenue and activity (e.g., non-airline revenue per enplanement), adjusted for known contract terms and inflation assumptions.
Building the Expense Projection
Operating and maintenance expenses are projected based on historical trends, staffing plans, contractual obligations (union contracts, service agreements), and inflation assumptions. The inflation assumption is a disclosed input—not an assertion. A defensible approach anchors it to an observable index: for example, the Consumer Price Index (CPI) trailing average, the Federal Reserve's implied breakeven inflation rate from the Treasury yield curve, or the airport's own historical O&M growth rate.