Generally, there are four sources of funding used to finance airport development: airport cash flow; revenue and general obligation bonds; federal/state/local grants, including the Airport Improvement Program (AIP); and Passenger Facilities Charges (PFCs). Under the 2012 FAA reauthorization, AIP received $13.4 billion over four years or approximately $3.35 billion annually funded primarily through airline ticket taxes. The PFC Program allows the collection of PFC fees – federally capped at no more than $4.50 – for every enplaned passenger at commercial airports.
One interesting note is that as airlines have implemented a la carte pricing, ticket price revenue has suffered because the airline ticket taxes are not applied to baggage fees, food sales, or other discretionary passenger purchases. Allowing for a modest increase of approximately $1 per ticket in the airline tax would cover much of the investment gap in airport infrastructure funding.
Funding issues have been compounded by the failure of Congress to regularly reauthorize FAA programs. Between 2007 and 2012 and again since 2015, the FAA operated under a series of short-term authorizations, leading to delays in investment decisions of FAA-funded airport projects. The current authorization will lapse on September 30, 2017. Furthermore, lapses in FAA authorization led to the stoppage of work on more than $10 billion in national aerospace and support projects and $2.5 billion in grants to new airport projects were withheld.
ASCE’s Failure to Act economic study released in 2016 projects that the average annual investment gap for airports through 2025 is expect to decrease from $4.6 billion to $4.2 billion. However, by 2040, the cumulative gap is expected to slightly increase from a per year average of $3.3 billion to $3.5 billion in 2015 dollars – leaving a total investment gap of $88 billion. By 2025 these projected infrastructure investment short falls may cause the loss of nearly 257,000 jobs and $337 billion in lost GDP.Back to Aviation