Government Funding of Airports

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Table of Contents

Introduction
Federal and Local Funding of Airports
Airport Improvement Program (AIP) and Its Uses
Uses of Airport Improvement Program
Conclusion
References

Introduction

While airport traffic volumes continue to increase historically, the United States aviation network cannot keep up with this tremendous pressure. As airports update their infrastructure to enhance the customer experience and increase airline competitiveness, they encounter unparalleled difficulties in acquiring the necessary funding. Airport architectural initiatives in the US are supported by federal funding through the FAA’s Airport Improvement Program (AIP), the Passenger Facility Charge (PFC), individual user tax, and tenant rents and charges (Raghavan & Yu, 2021). Revamping the PFC and sustaining a healthy AIP will provide airfields to do what they do best: provide clients with healthy, protected, and adequate amenities while also planning for the future (Raghavan & Yu, 2021). Without financing relief from PFCs and AIP, airports will fail to modernize the nation’s outdated aviation network. Therefore, this paper discusses the federal and local funding of airports and the AIP and its applications in the aviation sector.

Federal and Local Funding of Airports

Federal Funding

State-level spending varies significantly across the United States based on how government subsidies are funded and which entity administers the funds. Typically, transit agencies and airlines receive aviation funds. Airports may also be eligible for financial development assistance, depending on the building being conducted. Typically, state authorities fund aviation corporations by charging aircraft proprietors and airport passengers inside the state taxes and expenses. Therefore, this may include revenue generated from energy flowage fees. State funds are sometimes the only stream of capital funding for airports not included in the FAA’s NPIAS. Comparable to AIP subsidies, state subsidies frequently include guarantees regarding what airport donors must achieve to receive financing. These guarantees are intended to protect the state’s infrastructure improvements and maintain airport accessibility that is safe and effective. Generally, state funding is contentious, as there are more initiatives than available funds. States choose projects based on various factors, such as cost-benefit proportions, requirement and justification, geographical region, and a program’s potential to gain further funding.

Local Funding

Local financing will vary based on who owns and operates the airport. Nevertheless, most municipal support comes from tax income and usage fees received by the donor or airport administrator; however, this is not always achievable. Generally, regional airports supported by towns, townships, and legislatures do not produce sufficient income to cover their expenses; as a result, they get a portion or all of their operational budgets from the promoter’s general fund. Similarly, local financing can be utilized to offset capital expenses for projects that are ineligible or unlikely to get FAA and state funds or to fulfill a portion of the local match requirement for state and FAA grants. For income, airlines that rely on their promoter’s general revenue frequently contend with institutions, rescue services, and public works. Sponsoring decision-makers must be informed of the airport’s economic value, involvement in crisis and disaster management, and position within the nationwide transportation network.

Airport Improvement Program (AIP) and Its Uses

AIP offers airports government subsidies for construction activities and design. Members span massive, publicly run commercial airports to modest, privately held but fully available overall aviation facilities. The distribution framework of AIP funding mirrors legislative preferences and the goals of ensuring airline protection and reliability, improving passenger traffic, reducing congestion, assisting cover noise and emission expenditures, and subsidizing small state and neighborhood airports. Typically, AIP funding is restricted to building aircraft operations-related upgrades, such as taxiways and runways (Hubbard & Hubbard, 2022). Economic revenue-generating infrastructure and administrative expenditures are typically ineligible for AIP support.

As an assistance program, AIP provides funding for capital investments without the constraint of borrowed funds, although airports are obligated to contribute a minimal regional equivalent to the federal monies. AIP grant restrictions include the scope of eligible projects and the need that beneficiaries conform to all program procedures and grant conditions. In addition, an airport must be listed on the National Plan for Integrated Airport Systems (NPIAS) to be considered for a subsidy (Hubbard & Hubbard, 2022). The NPIAS, compiled and released every two years, highlights public-use airfields that serve the demands of commercial aviation, public safety, and the postal offering and are vital to mass transportation.

Among the eligible projects are enhancements to airline security, infrastructure, protection, and environmental issues. In general, sponsors can obtain AIP funding for the majority of airport capital upgrade or rehabilitation projects, as well as, in some circumstances, gateways, maintenance facilities, and non-aviation enhancement. Specific consultancies can also be authorized, such as organizing, surveying, and architecture required for qualified projects. Donors of airports that obtain funding also acknowledge the conditions and responsibilities associated with the financial guarantees (Hubbard & Hubbard, 2022). These responsibilities include operating and maintaining the airport in a healthy and serviceable state, not granting exclusive rights, mitigating threats to airspace, and using airport money appropriately.

Uses of Airport Improvement Program

The sophisticated delivery network for AIP grants comprises formula awards, apportionments or entitlements, and discretionary funding. The remaining monies are considered discretionary money once all entitlements have been met. Airports submit funding requests for initiatives outlined in their grand schemes. Airports receiving formula funding may also request and be granted discretionary cash. First, entitlements are money allocated to airports according to a methodology and may be utilized for any approved airport construction or management project. These monies are categorized as follows: principal airports, freight service airlines, commercial aviation, and Alaska additional funding.

Second, the discretionary funds consist of unallocated entitlement funds and passenger facility fee (PFC) income not put into the small airport budget. The three significant set-asides and discretionary spending conditions apply to appropriations: Airport noise set-asides, in which at least 35% of discretionary resources are allocated to noise conformity preparation and sound mitigation and adaptation activities. At least 4% of discretionary expenditures are set aside for the transformation and dual usage of up to fifteen existing and former military runways (Mott & Bullock, 2017). The program permits funding for initiatives not ordinarily entitled to AIP funding. Grants for reliever airports where two-thirds of 1% of discretionary money are made aside for auxiliary airports in urban areas with canceled flights (Mott & Bullock, 2017). Finally, the AIP awards funding to governmental entities for the construction and development of airports included in the NPIAS that serve the general public. Among the initiatives qualified for AIP funding are enhancements to aviation protection, efficiency, surveillance, and environmental impacts. Airport donors can use AIP money for most runway capital projects or maintenance to enhance the airport’s health, throughput, and noise tolerance.

Conclusion

In conclusion, FAA’s Airport Improvement Program (AIP), the Passenger Facility Charge (PFC), individual user tax, and tenant rents and charges fund airport architectural efforts in the US. How federal subsidies are paid and who manages the cash affects government expenditures across the US. On the other hand, personnel who controls and manages the airport affects local funding. Most municipality support comes from tax money and usage fees; however, this is not always possible. Members range from large public airports to small private aviation establishments. Security, infrastructure, protection, and ecological degradation are suitable initiatives. Formula awards, entitlements, and discretionary financing make up AIP’s complex supply chain. Donors can use AIP contributions for airport capital upgrades or management to improve airport healthcare, capacity, and noise compliance.

References

Hubbard, B. J., & Hubbard, S. M. (2022). Tracking and monitoring technologies to support airport construction safety. In IOP Conference Series: Materials Science and Engineering (Vol. 1218, No. 1, p. 1-10). IOP Publishing.

Mott, J. H., & Bullock, D. M. (2017). Estimation of aircraft operations at airports using mode-c signal strength information.IEEE Transactions on Intelligent Transportation Systems, 19(3), 677-686.

Raghavan, S., & Yu, C. (2021). Evaluating financial performance of commercial service airports in the United States. Journal of Air Transport Management, 96, 1-16.

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