Airport Improvement Program:

Planned Funding Under Letters of Intent

RCED-99-33R: Published: Dec 9, 1998. Publicly Released: Dec 9, 1998.

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John H. Anderson, Jr
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Pursuant to a congressional request, GAO reviewed: (1) what types of Air Improvement Program (AIP) projects are currently being funded by letters of intent; (2) how much funding remains to be paid under these letters; (3) what share of the projects' total costs these letters cover and what other sources of funding the projects have; and (4) what percentage of AIP discretionary funding the letters of intent represent for fiscal year 1999 through fiscal year 2004.

GAO noted that: (1) almost half (12) of the 28 open letters of intent fund projects for both airfield improvements such as runways and lighting (airside projects), and nonairfield improvements, such as terminal and access roads (landside projects); (2) of the remaining 16 letters, 14 support airside projects exclusively and 2 support only landside projects; (3) letters of intent are now used to fund only airside projects because of a policy change the Federal Aviation Administration (FAA) made in 1994; (4) the 28 open letters of intent that are scheduled for payment in fiscal years 1999 through 2010 total $1.18 billion; (5) of this amount, $867 million (73 percent) is discretionary funding, which FAA uses each year to fund competing and and high-priority airport projects; (6) 5 letters of intent have final payments scheduled in fiscal year 1999, and the remaining 23 open letters of intent have final payments scheduled in fiscal year 2000 through fiscal year 2010; (7) the 28 open letters of intent fund about 22 percent of projects' total costs, which amount to $10.2 billion; (8) the remaining 78 percent of the funding for the projects comes primarily from current and projected airport revenue, passenger facility charges, and state and local contributions; (9) the 28 letters of intent account for 16 percent of all of AIP's planned discretionary funding in fiscal year 1999, declining to about 8 percent in fiscal year 2004; (10) these percentages are based on an AIP funding level of $1.95 billion, which was the level appropriated for fiscal year 1999; and (11) these levels of commitment are significantly less than FAA's internal policy limit of 50 percent of AIP discretionary funds that may be used for letters of intent.

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