Airport Financing:

Comparing Funding Sources With Planned Development

T-RCED-98-129: Published: Mar 19, 1998. Publicly Released: Mar 19, 1998.

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John H. Anderson, Jr
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GAO discussed airport funding issues, focusing on: (1) how much airports are spending on capital development, and where the money is coming from; (2) whether current funding levels will be sufficient to meet airports' planned development; and (3) what effect will various proposals to increase airport funding have on airports' ability to fulfill capital development plans.

GAO noted that: (1) in 1996, the 3,304 airports that make up the national airport system obtained about $7 billion for capital development; (2) more than 90 percent of this funding came from three sources: (a) airport and special facility bonds; (b) the Airport Improvement Program (AIP); and (c) passenger facility charges paid on each airline ticket; (3) the magnitude and type of funding varies with each airport's size; (4) the nation's 71 largest airports accounted for nearly 80 percent of this funding; (5) as a group, these airports received only about 10 percent of their funding from AIP; (6) by contrast, the remaining 3,233 smaller airports that complete the national system rely on AIP for half of their funding; (7) airports planned as much as $10 billion per year in development for the years 1997 through 2001, or $3 billion per year more than they spent in 1996; (8) about $1.4 billion per year of that development is planned for safety, security, environmental, and reconstruction projects--the Federal Aviation Administration's highest priorities; (9) another $1.4 billion per year of that development is planned for other high-priority projects, primarily adding airport capacity; (10) other projects of a relatively lower priority, such as bringing airports up to FAA's design standards, add another $3.3 billion per year; (11) airports anticipate another $3.9 billion per year for projects that are not eligible for funding from AIP, such as expanding commercial space in terminals and constructing parking garages; (12) the difference between current funding and planned development is especially acute for smaller commercial and general aviation airports; (13) their 1996 funding would cover only about half of their total planned development; (14) several proposals to increase airport funding have emerged in recent years; (15) these include increasing the amount of funding for AIP, raising or eliminating the ceiling on passenger facility charges, and better leveraging of existing funding sources; and (16) these proposals vary in the degree to which they help specific types of airports.

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