Introduction
I have reviewed the financial statements of Seattle-Tacoma International Airport as of December 31, 2020, for the years concluded December 31, 2021, and 2019, as well as the associated summaries to the monetary reports, which together make up the Port’s fiscal report. The financial propositions fairly present the net positions of the Organization Investments and the Warehousemen’s Retirement Charitable Trust of Seattle-Tacoma International Airport as of December 31, 2021, and 2020, as well as the adjustments in cumulative status and earnings for the Corporate Financing and the variations in the remaining trust account for the previous years. From my viewpoint of the financial report, the revenue and expenses of Seattle-Tacoma International Airport have increased and decreased, respectively, after the COVID-19 pandemic.
Investment Fund
Overview of Financial Circumstances
The Enterprise Fund of the Port’s economic situation as of the conclusion of the fiscal year is shown in the Report on Disposable Situation. The Enterprise Fund’s resources, charges, and deferred inflows of resources are included in the statement (Brito et al., 2021). The variance concerning entire resources postponed resource expenses, and total charges in addition to deferred resource influxes or net position measure the organization’s present financial condition and long-term financial situation.
The most significant component of the Enterprise Fund’s net position for each year corresponds to its disposable asset in investment resources. These investment resources are not available for future expenditures since the Port uses them to deliver amenities to its occupants, travelers, and customers of the Flight, Nautical, and Fiscal Growth departments (Brito et al., 2021). Even though the Port’s disposable security in money resources is disclosed, the remaining associated liability should be clear. Since money resources cannot settle charges, the funds needed to retire this debt must be paid annually from operations (Brito et al., 2021). The remaining security in money resources was raised from 2020 to 2021 and 2019 to 2020 by $86.5 million and $53.6 million, correspondingly. The new asset additions and construction activity in significant Aviation initiatives were the main drivers of this category’s increase, net of cumulative depreciation, primarily offset by associated demolitions.
Report of Proceeds, Expenditures, and Fluctuations in Net Situation
The variation in the net situation shows whether the Enterprise Fund’s overall financial situation has improved or deteriorated over the year.
Financial Operations Highlights
Operating revenues rose from $510.8 million in 2020 to $622 million in 2021, a surge of $111.2 million or 21.8 percent. The COVID-19 Delta and Omicron variants delayed recovery, although the trend toward a steady reviving and easing constraints to travel increased operational income (Brito et al., 2021). In 2021, the Port resumed its aggressive cost-saving measures at the port level in reaction to the financial disturbance instigated by the epidemic (Port of Seattle, 2019). From $408.7 million in 2020 to $364.7 million in 2021, operational expenditures fell by $44 million, or 10.8%. Functional revenue after reduction rose by $155.2 million in 2021 and fell by $218.9 million in 2020. (Port of Seattle, 2020). In 2021 and 2020, depreciation costs climbed by $10.6 million and $5.1 million, respectively. Non-operating income—net for 2021 was $100.6 million, down $41.5 million from 2020. (Brito et al., 2021). The drop was mostly caused by a decrease in federal relief funding from the FAA of $46.8 million from 2020 to 2019.
Trust Fund for Warehousemen’s Pensions
The Fiduciary Trust manages the Warehousemen’s Annuity Reliance Reserve. This fund serves as the vehicle through which the Port, as trustee, accounts for the employee benefit plan’s assets (Brito et al., 2021). The total fiduciary net position increased by $0.8 million and $0.9 million, correspondingly, from December 31, 2021, and 2020, mostly due to increases in gathered gains on funds and the rational cost of reserves.
Investment Resources
As of December 31, 2021, the Port’s investment resources, net of accrued reduction, for its commercial operations were $7.1 billion. By way of a King County ad valorem duty charge, the Port received $78.3 million in property taxes during 2021. (Port of Seattle, 2021). The Port receives funding for its capital assets from various sources, such as operational revenue, ad valorem duty levies, PFCs, CFCs, national and public endowments, and bond incomes. The Enterprise Fund accounts for all capital assets.
Administration of Debt
As of December 31, 2021, the Port had $3.7 billion in outstanding tax securities and corporate debt, up to $312.3 million from the previous year. This increase was caused by the granting of fresh securities, mitigated by planned repayments and the repaying of current income securities (Port of Seattle, 2022). The Port approved $109.5 million in Series 2022 Constrained Duty GO and Repaying Securities in January 2022 to bankroll insured Port expenditures, like paying corporate debt approved to fund the shortfall, entirely reimburse the Port’s unsettled Series 2011 Constrained Duty GO Repaying Securities, and cover the price of granting the securities.
Airport Privatization and Complex Relationships
Privatization
The network of airports is a crucial component of air transportation. As a result, all industry participants are interested in the trend toward airport privatization. Although airport privatization is not new, its results have been mostly dismal (Leavitt et al., 2018). Customers should be included as essential stakeholders from the beginning and frequently through established processes. Through the transfer to private ownership, a great emphasis should be on obtaining a more effective administration of the airport assets. Good governance is crucial if the privatization is in the public interest. Effective economic regulation is necessary to incentivize efficiency increases (Port of Seattle, 2018). An inappropriate conflict of interest is automatically created when the government meddles in airport regulations.
Additionally, an independent competition body that airports and their customers can appeal to should oversee the economic regulator. Economic authorities have so far been more successful at maximizing the efficiency of existing assets than they have been at ensuring that new investments are made at a reasonable cost (Leavitt et al., 2018). Cost-saving incentives ought to be incorporated into the process from the beginning. Regulation must prevent monopolistic profits or inefficiencies from being maintained from the beginning. Controls must be present to prevent arbitrary asset revaluations or regulatory structure changes that impose hefty fee hikes on airlines and their customers. Customer input is crucial to guarantee that new investment is appropriate, economical, timely, and within the proposed budget. There should be no “gold plating” of investments.
Conclusion
Large infrastructures like airports frequently cooperate with multiple territorial administrations. An airport may be located in more than one local government, and its influence and impact, such as in terms of noise, may extend to many other local governments. When examining the operations at the local government level, the airport activities connect the departments such as public safety and transportation. Both large and small airports must adhere to certain fundamental standards (Witter, 2018). Our company has observed that when airport administrations collaborate closely with territorial administrations to create a sustainable shared vision, the territory and the airport thrive, and the economy becomes more competitive. The prospects for regional growth that an open discourse could bring are lost when the two parties cannot agree, sometimes even resorting to litigation (Witter, 2018). The two must collaborate and exchange data on governance, urban planning, mobility, the ecosystem, strategic plan, industrial progress and productivity, advertising, financing, inclusivity, and employment services.
References
Brito, I. R., Oliveira, A. V., & Dresner, M. E. (2021). An econometric study of the effects of airport privatization on airfares in Brazil. Transport Policy, 114, 338-349.
Leavitt, E., Meyn, S., Purcell, A., & Stanton, L. (2018). Moving toward sustainable aviation fuel at Seattle-Tacoma International Airport. Journal of Airport Management, 12(4), 391-398.
Port of Seattle (2018). Annual comprehensive report. Web.
Port of Seattle (2019). Annual comprehensive report. Web.
Port of Seattle (2020). Annual comprehensive report. Web.
Port of Seattle (2021). Annual comprehensive report. Web.
Port of Seattle (2022). Annual comprehensive report. Web.
Witter, I. (2018). Managing the complexity of risks and regulatory compliance: Looking at safety from both ways. Journal of Airport Management, 12(4), 330-338.