Which funding source is a form of debt financing for airports?

Which funding source is a form of debt financing for airports?

• A. Federal Grants
• B. Bond Issues
• C. Private Investment
• D. Private Grants

Answer: (B)

Debt financing means raising funds by borrowing that must be repaid with interest. Airports commonly use this approach by issuing bonds, which are sold to investors now and paid back over time with interest. The proceeds from bond issues fund major capital projects like runways, terminals, and security upgrades, and the obligation to repay rests on the issuer, typically with debt service paid from airport revenues or general funds. Federal grants and private grants do not require repayment, so they are not debt financing. Private investment can involve ownership or loans, but for a public airport’s typical capital programs, bonds are the classic debt instrument used.

Debt financing means raising funds by borrowing that must be repaid with interest. Airports commonly use this approach by issuing bonds, which are sold to investors now and paid back over time with interest. The proceeds from bond issues fund major capital projects like runways, terminals, and security upgrades, and the obligation to repay rests on the issuer, typically with debt service paid from airport revenues or general funds. Federal grants and private grants do not require repayment, so they are not debt financing. Private investment can involve ownership or loans, but for a public airport’s typical capital programs, bonds are the classic debt instrument used.