AirportInfo. Airport Improvement Program

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Eugenia Blankenship
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1 AirportInfo Airport Improvement Program April 2014

2 Airport Improvement Program (AIP) AIP provides grants to airport sponsors for the planning and development of public-use airports. To be eligible for an AIP grant, airports must meet the following criteria: 1) be publicly owned, or privately owned, but designated by the FAA as a reliever, or 2) be privately owned, but having scheduled commercial service and at least 2,500 annual enplanements, and 3) further, an airport must be included in the National Plan of Integrated Airport System (NPIAS). The NPIAS is published every two years and identifies public-use airports that are important to public transportation and contribute to the needs of civil aviation, national defense and the postal service. For large and medium primary hub airports, the grant covers 75 percent of eligible costs (or 80 percent for noise program implementation). For small primary, reliever, and general aviation airports, the grant covers a range of percent of eligible costs, based on statutory requirements. The AIP program is 100% funded by the Airport and Airway Trust Fund (AATF), the revenue of which are derived from aviation-related excise taxes and fees on passengers, cargo, and fuel. In addition to AIP, AATF also provides over two-thirds of funding for the FAA. Source: FAA 2

3 AIP A Critical Funding Source for Capacity, Safety, Security and Environmental Projects Eligible projects include those improvements related to enhancing airport safety, capacity, security, and environmental concerns. In general, AIP funds can be used: on most airfield capital improvement or repairs and in some specific situations, for terminals, hangars, and non-aviation development; any professional services that are necessary for eligible projects such as planning, surveying, and design; and aviation demand at the airport must justify the projects, which must also meet Federal environmental and procurement requirements. Because the demand for AIP funds exceeds the availability, FAA bases distribution of these funds on current national priorities and objectives. AIP funds are typically first apportioned into major entitlement categories such as primary, cargo, and general aviation. Remaining funds are distributed to a discretionary fund. Set-aside projects (airport noise and the Military Airport Program) receive first attention from this discretionary distribution. The remaining funds are true discretionary funds that are distributed according to a national prioritization formula. Source: FAA 3

4 In Millions AIP Funding Has Been Decreasing Grants-in-Aid Administration R&D ACRP SCASDP $3,600 $3,500 $3,400 $10 $18 $71 $75 $19 $19 $22 $22 $81 $87 $93 $93 $3,300 $3,200 $29 $101 $30 $107 $3,100 $3,000 $2,900 $2,800 $2,700 $3,459 $3,437 $3,395 $3,385 $3,378 $3,378 $3,199 $29 $101 $2,939 $3,194 $30 $107 $2,748 While the AIP program was essentially level-funded at $3.515 billion from , AIP has been cut twice in the past four years, first in the FY 2012 appropriations process from $3.5 billion to $3.35 billion, and most recently by an additional $253 million in FY2013 to end FAA furloughs. The actual amount available for grants decreased even further due to additional administrative and research funding needs. Source: FAA FY2015 Budget Estimates *FY2015 based on President s Budget 4

5 AIP Grants by Fund Type State Apportionment 7.4% Small Airport Fund 15.2% Capacity/Safety/ Security/Noise Set Aside 7.3% 9.5% Pure Discretionary 1.8% Discretionary from Converted Entitlements 17.3% Nonprimary Entitlement 12.6% Alaska Supplement 0.7% Cargo Entitlement 3.5% Passenger Entitlement 23.4% Source: FAA for FY2013 5

6 AIP & PFC are Used to Fund Different Types of Projects Due Largely to Differing Eligibility Requirements Distribution of AIP Grants and PFC Approvals by Project Type (FY08-FY12) 80% 70% 70.3% Percentage of PFC Percentage of AIP 60% 50% 40% 30% 31.2% 43.2% 20% 10% 0% 16.9% 11.2% 10.8% 6.7% 6.8% 1.9% 0.0% 1.1% 0.0% Airside Landside/Terminal State block grants Noise Roads/Access Interest on Bonds Source: 2013 Financing Airport Improvements Report, Congressional Research Service. 6

7 in Millions FY 2013 Grant Distribution by Airport Classification 800 Entitlement Discretionary LOI Entitlement LOI Discretionary Source: FAA Large Medium Small Non-hub Commercial Service Reliever General Aviation Other 7

8 AIP Flow of Funds FY 2013 Congress Authorized and Appropriated Amount $3,350M Small Community Air Service Development Program $6M Administrative Expenses $101M Double Entitlement Trigger : $3.2B Research & Development $44.2M Net Passenger Entitlements Total Available for AIP Grants $3,199M $850.3M Primary Airports $1,406M Cargo (3% of total available for AIP grants) $112M Alaska Supplemental $21.3M States (20% of total available for AIP grants) $639.8 Protected Entitlements (Carryover) $702.7M Nonprimary Entitlement $401M State Apportionment by Formula $237.5M PFC Turn Back $556M 12.5% $69.5M Small Hub Airports $69.5M 87.5% $486.4M Non- Commercial Service Airports $139M Small Airport Fund $486.4M Non-hub Airports $278M Discretionary Funds Total Available Discretionary Funds $386.6M Available Funds Admin Entitle ments Small Airport Fund Turnback LOI

FY 2013 AIP Flow of Funds: Discretionary Total Available Discretionary Funds $386.6M Letter of Intent Discretionary Large Hub $182.6M Letter of Intent Discretionary Medium Hub $39.

9 FY 2013 AIP Flow of Funds: Discretionary Total Available Discretionary Funds $386.6M Letter of Intent Discretionary Large Hub $182.6M Letter of Intent Discretionary Medium Hub $39.7M Noise Set- Aside (35% of Discretionary) $133.5M Reliever Set- Aside (0.66% of Discretionary) $2.5M Military Airports Program (MAP) (4% of Discretionary) $15.3M Remaining Available Discretionary Funds $235.3M AIP Grab: $253M Capacity/Safety/Security/Noise Discretionary Projects $176.5M Remaining Pure Discretionary Funds $58.8M Unallocated Pure Discretionary Funds $13M Total Pure Discretionary Funds for FY 2013 $462.7M Discretionary Funds Available Funds Admin Entitle ments Small Airport Fund Turnback 9 LOI

10 Millions AIP Carryover Has Been Increasing Nonprimary Passenger Cargo State or State/Insular % 37.4% % 58.9%. Source: FAA AIP carryover entitlement has been increasing for the past five years. Nonprimary airports represented 59% of the total carryover entitlement in 2013 and increased their share by 1.3 percentage points. Passenger entitlement which includes all primary airports represented 37% of the total carryover in 2013 and increased their share by 1.6 percentage point. 10

11 Why Care About High Carryover? Passenger and cargo entitlement funds for large, medium and small hubs, State Apportionment, and Alaska supplemental are available two fiscal years immediately following the year in which the funds are apportioned, or a total of three years. Nonhub primary and nonprimary entitlement and cargo entitlement funds are available three fiscal years immediately following the year in which the funds are apportioned, or a total of four years. Discretionary funds have to be spent the same year when granted. High carryover translates to high uncertainty for future discretionary funds. High carryover makes it an easy target for a potential future AIP grab as it happened in FY2013. Source: FAA AIP Handbook 11

12 AirportInfo April 2014 Contact: Economic Affairs and Research Tel:

Airport. Improvement Program (AIP) Overview. Federal Aviation Administration. Texas Aviation Conference Ben Guttery, Texas ADO April 2017

Airport. Improvement Program (AIP) Overview. Federal Aviation Administration. Texas Aviation Conference Ben Guttery, Texas ADO April 2017 Airport Improvement Program (AIP) Overview Texas Aviation Conference Ben Guttery, Texas ADO April 2017 Objectives Status of AIP Legislative Authority History and Summary of AIP AIP funding formulas 2 AIP