Fact Sheet

The Airports Financing Proposals

Why Reform is Needed

We started looking at airport funding about 18 months ago. We examined airport capital requirements — especially secondary and reliever airport needs — and the ability of airports to pay. We talked to the municipal markets and rating agencies; and we looked at emerging trends to determine where the data is driving the universe of airport financing.

All parties agree that:

• Capital Requirements are up
• Airports have recovered financially, but
• Airports need to increase their financial self-sufficiency
• Federal funds need to be better targeted to keep pace with the changing trends in aviation and be available to fund enduring requirements

Our $2.75 billion AIP request, when combined with programmatic changes to AIP and the PFC program will provide the financial resources FAA needs to meet the nation’s highest priorities for safety and security, major safety initiatives. This includes projects such as upgrading runway safety areas and mitigating runway incursions, funding current and future letters of intent for capacity projects at commercial airports, and preserving existing airfield infrastructure and advancing compliance with airport standards.

These changes assure that airports of all sizes have a stable and reliable source of funding so that they can meet critical capital requirements.

• We’re enhancing all commercial airports’ ability to generate funds for capital investment through a three-part reform to the PFC program.
• We’re raising the maximum PFC from $4.50 to $6.00, bringing an additional $1.2 billion annually to commercial airports. Our research shows the money raised from this capital infusion should be sufficient to fund needed projects through the life of the bill.
• We’re expanding PFC eligibility to include any airport capital investment, as long as it will not hinder competition, to maximize the flexibility of airports to fund their own projects.
• We’re streamlining the review process for PFC’s to help airports modify their PFC programs more quickly, while continuing to carefully review controversial projects. Airports will be able to put their PFCs to work faster building the airport infrastructure the nation needs.

We’re deregulating and giving large commercial airports more financial flexibility to run their airports more efficiently.

• Large airports are strong and mature financial enterprisesthat no longer need guaranteed passenger entitlements to meet their capital needs. The bill phases their passenger entitlements out over two years. AIP will continue to support costly capacity and safety projects through the enhanced discretionary fund. The additional PFC revenue flowing to these airports will more than compensate for lost entitlement funding.
• The minimum discretionary amount will be increased from the current level of $148 million — set when AIP was at $1.4 billion — to $520 million. Large airports will be able to tap this fund to finance letters of intent for expensive capacity projects and costly safety improvements, such as runway safety areas.

We’re providing a more rational structure for general Aviation Airports and Small Commercial Airports, while preserving their access to essential AIP funds.

• Proposed program changes target AIP spending to airports most dependent on AIP.
• The current passenger entitlements for small primary airports, which depend on AIP to meet their capital needs, will be retained at all levels of AIP. The current statutory penalty that reduces passenger entitlements by 50 percent when AIP levels are less than $3.2 billion will be eliminated.
• Small commercial airports will benefit from the proposed increase to PFCs to $6.00, which may bring up to $500 million more for small airports.
• We’re going to make the GA airport entitlement work better for secondary and reliever airports, which have larger airfields with more complex geometry by creating a tiered structure. These airports, which relieve congestion at busy commercial airports, will receive $400,000 per year instead of the $150,000 that currently even the smallest GA airport used by recreational flyers with single engine piston aircraft.
• We’re restructuring the small airport fund as a fixed percentage of AIP discretionary funds. This dedicated pool of money will no longer have its level depend on the rate of PFC collection at large airports.
• We are establishing a minimum state apportionment amount of $300 million and are changing the method of calculating it that is independent of GA entitlements.

We’ve proposed common sense changes to AIP eligibility rules to help airports be more self sufficient. A few include:

• GA airports can use their entitlements to buy self-service fuel pumps on a stand-alone basis. Today, AIP can be used only to install an entire fuel-farm system.
• GA airports can use their entitlements to rehabilitate hangars and terminals. Today, the entitlements can only be used to build replacement hangars, even if a rehab would be cheaper.
• AIP eligibility can cover fuel spill containment for fuel trucks required under new EPA regulations, where there was a shortfall to fund this requirement.
• Disposal of AIP-funded noise land will be more changed so airports can develop disposal plans that further the interests of the airport without sacrificing the federal interests in timely land disposal.

AIP funds will be better targeted where they’re needed, by eliminating outdated set-asides and ensuring that post 9/11 emergency subsidies that no longer serve their intended purpose sunset on schedule.

• We’re eliminating the MAP set aside, while keeping special MAP eligibility rules to help military bases convert to civil use when they are really needed. With few new airfields being converted to civil use, the minimum spending requirement no longer makes sense.
• We’re eliminating the reliever set aside, which consistently represents a small fraction of what we actually spend on reliever airports.
• Local matching share for small airports will revert to 90 percent from 95 percent, for all but the smallest GA airports.
• By eliminating the set asides and letting the subsidies expire, FAA will have over $150 million more to invest in new projects at a time when airport capital needs are growing.

We’re proposing two pilot programs to encourage airports to be active participants in the NextGen transition.

• ADS-B deployment pilot program: We propose to broaden AIP eligibility to include installing ADS-B ground stations in markets that FAA cannot reach in the F&E program.
• Terminal Navaid Takeover Pilot Program: We will offer 10 large airports the chance to charge an extra dollar of PFCs (to $7.00 total) in exchange for taking over ground based terminal navigational and weather equipment at their airport.

 We’re making the funding source for aviation capital projects more transparent.

• AIP will be funded from two sources:
  • A 13.6 cent fuel tax
  • A $6.39 international passenger tax