ACE - Airport Certified Employee Airport Financial Management Questions and Answers 1

Question 1

An airport is planning a major runway extension to accommodate larger aircraft. To fund this project, the airport authority decides to issue bonds that are secured by the future landing fees, terminal rentals, and other income generated by the airport's operations. What type of financing instrument is being used?

Accepted Answer

Revenue Bonds

Answer

Revenue bonds are municipal bonds secured by the income produced by a specific project or source, such as an airport's operational revenues. This is distinct from General Obligation (GO) bonds, which are backed by the full faith and credit (including taxing power) of the issuing government entity. AIP grants and PFCs are other funding sources but are not types of bonds issued by the airport authority itself for this purpose.

Question 2

Which of the following is considered a primary source of non-aeronautical revenue for a commercial service airport?

Accepted Answer

Parking and ground transportation fees

Answer

Non-aeronautical revenue is income generated from sources other than direct airline operations. Parking and ground transportation fees are a major category of non-aeronautical revenue. Aircraft landing fees, airline terminal rentals, and fuel flowage fees are all examples of aeronautical revenue, as they are directly related to aircraft and airline operations.

Question 3

A key agreement that establishes the terms and conditions for airlines to operate at an airport, including the calculation of rates and charges for using facilities, is known as the:

Accepted Answer

Airline Use and Lease Agreement

Answer

The Airline Use and Lease Agreement is the foundational contract between an airport and its airline tenants. It outlines the rates, charges, and responsibilities of both parties, forming the bedrock of the airport's financial relationship with the airlines. The other options are important documents but do not primarily govern the financial terms between the airport and airlines.

Question 4

An airport's finance department is preparing its annual budget. Which of the following costs would be categorized under Operation and Maintenance (O&M) expenses?

Accepted Answer

Salaries and wages for custodial staff

Answer

Operation and Maintenance (O&M) expenses are the recurring costs associated with the day-to-day running of the airport. Salaries and wages for staff are a primary example of an O&M expense. Construction projects, land acquisition, and debt service payments are considered capital improvement expenses or financing costs, not routine O&M.

Question 5

The Federal Aviation Administration (FAA) provides federal grants for airport development and planning through which primary program?

Accepted Answer

Airport Improvement Program (AIP)

Answer

The Airport Improvement Program (AIP) is the primary FAA program that provides federal grants to public agencies for the planning and development of public-use airports. To be eligible, an airport must be part of the National Plan of Integrated Airport Systems (NPIAS). PFCs are collected by airports, not provided as grants from the FAA, and the other options are not FAA grant programs for airport development.

(ACE) Airport Certified Employee Practice Test

(ACE) Airport Certified Employee Practice Test

ACE - Airport Certified Employee Airport Financial Management Questions and Answers 1