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Case Study: Commercial Paper Management at Philadelphia International Airport


Airport capital programs are often funded by multiple and varying sources including federal and state grants, bonds, passenger facility charges, and operating cash. In recent years, airports have seen a trend of diminishing dollars received from federal and state government grants. In response, bonds and other debt instruments secured by airport and airline revenues have become important funding sources for many airports. Some sources, including grants and bonds, typically have restrictions on how funds may be spent. Additionally, government and financial institution reporting requirements have grown more stringent, with greater transparency becoming the norm. Tracking fund allocation and expenditures by funding source is a significant challenge for almost all airports, regardless of size.

Philadelphia International Airport (PHL) is no exception. PHL is a critical Northeast hub that served just over 30 million total passengers in 2012. It was ranked as the 18th busiest U.S. airport that same year. A total of twenty-seven carriers provide air service to 125 U.S. cities and 37 international destinations.

In evaluating industry trends and growth expectations, PHL and City leadership anticipated the need for expanded airport facilities to handle more passengers and flights both domestically and internationally. The PHL Capacity Enhancement Program (CEP), started in fiscal year 2012, is a 10-year approximately $6 billion initiative that will greatly improve and extend airside and landside airport facilities. Projects to be completed during that time include a new runway, runway extensions, new terminals, new cargo facilities, and a people mover.

In order to get the CEP underway quickly, in late 2012, PHL began implementation of a "commercial paper" program to address both the short-term and medium-term funding needs of the CEP.

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