The Magic of AIP Funding

April 15, 2015
Though there's no magic involved, the how’s and the why’s behind AIP funding for general aviation airports

Ask people around an airport if the acronym “AIP” means anything and most will probably nod their heads positively. But ask them for anything more specific and those responses will probably become blank stares. 

AIP, or Airport Improvement Program, is a funding system that ensures airport upgrade projects that help the facility remain open and viable are completed. Dollars are appropriated annually by the House and Senate Appropriations Committees from the Airport and Airway Trust Fund (yes, it still exists) and are handed to the FAA, which assigns the funds to specific airports as it sees fit. In 2015, that amount totaled about $3.35 billion, a number that has remained essentially flat for years.

Though the funding remains flat, the importance of AIP has not diminished. Trevis Gardner, the vice president of operations at Metropolitan Knoxville Airport Authority, a commercial service and general aviation airport, says, “AIP [money] buys those critical capital items that are must haves for airports like runways, or taxiways, or ARFF equipment, anything that deals with safety or capacity.”

Centennial Airport Executive Director Robert Olislagers agrees, calling AIP, “The lifeblood of many airports, more so for general aviation airports. 

Addison Airport sits eight miles north of Dallas Love Field, and its director, Joel Jenkinson, says, “This system of paying for airport infrastructure [AIP] is not much different from the interstate highway system.”

And, Elliott Black, director of the FAA Office of Airport Planning and Programming, says the agency sees AIP funding as a way to help “preserve safety, capacity, security efficiency and environmental sustainability by building and rebuilding, as necessary, the critical facilities that enable an airport to accommodate safe transportation.” 

However, not every airport in the nation is eligible for AIP funding. Only those listed in the National Plan of Integrated Airport Systems (NPIAS), a ledger that currently includes 3,345 existing or proposed airports in the 50 states, can vie for those dollars. The vast majority of NPIAS airports are public use. “The FAA puts a pretty high priority on reliever airports,” says Black. “If the traffic from Chicago Executive, or Waukegan or DuPage airports, ended up at O’Hare for some reason, that hub would grind to a halt.”

How We Got Here

Public funding for airports has existed in various forms since the end of World War II when the federal government developed an airport grant system funded by the U.S. Treasury. By 1970, a more sophisticated version was created through the Airway Development Act funded by the then newly created Airport and Airway Trust Fund. The program we now know as AIP has remained the same since about 1982.

The Trust Fund is fed essentially by excise taxes collected from people who use the system, much like Interstate highways. Taxes are levied on domestic airline passenger tickets, domestic airline passenger flight segments, international passenger arrivals and departures, air cargo waybills, and dollars paid for the right to provide mileage awards.

Closer to the heart of many general aviation airport managers are taxes collected on aviation fuel. The FAA collects just over $0.19 per gallon of 100 Low-lead (100LL) and approximately $0.22 for each gallon of Jet-A from general aviation operations. In 2012, a $0.14 per gallon surcharge was added for fuel used in fractional ownership operations. The airlines fuel tax is approximately $0.04 per gallon.

At first glance it might appear the airlines are not paying their fair share of the tax when general aviation pays five times the amount per gallon. But the numbers are all relative. For one thing, the airlines normally gulp considerably more fuel than general aviation, making their total annual tax bill huge.

The debate about which segment of aviation does or should pay more than another --commercial versus general aviation--flares up every so often as does the argument about which airports should receive more or less AIP money. Years ago, the airline trade association, Airlines for America (A4A), then known as the ATA, created a massive media campaign known humorously as “Aunt Edna,” that portrayed a herd of little airplanes carrying just a few people clogging the ramps in front of airliners carrying hundreds. Supporting their claim, the airlines said, was the host of taxes that they charge passengers in the price of their ticket.

Before you start flipping to support the airlines and large airport side of the debate, it’s crucial to mention passenger facility charges (PFC), funds-- currently at $4.80 per flight segment-- that although regulated by the FAA, are treated more like local dollars. Commercial airports can generate significant amounts of regular cash flow from PFCs, revenue streams that allow them to go to Wall Street to issue bonds against major projects. General aviation airports are not, however, eligible to impose PFCs, which is why AIP funds are so important to these airports.

Airports are allowed to add a fuel flowage fee that becomes a direct source of revenue for these airports. “Addison’s flowage fee is $0.12 per gallon and has not changed since October 1994,” says Jenkinson. At Centennial, the flowage fee is $0.15 per gallon.

How the Cash Flows

Despite the focus on actual dollars, Black reports that the airport project approval process, “never begins with funding. It starts with many years of planning to help airport managers determine what facilities they need upgraded to accommodate aeronautical demand.”

At Knoxville, Gardner says, “The planning for our new runway project took almost five years from the moment we first began thinking about it.” While at Centennial, Olislagers reports his taxiway Alpha rebuild project, set to begin this spring, first came to mind, “a long time ago.”

The Addison runway project, a full-depth repair at the ends and an overlay, appeared on the planning radar 10 years before the project began in 2011. As a single runway airport, Jenkinson mentioned the airport and the town’s efforts to make the most use of the runway’s downtime--nine full weekend closures. “The airport used the downtime to add new edge lights, new runway guard lights and install new PAPIs [precision approach path indicators],” he says.

AIP funds are divided into two categories: Entitlements and discretionary money, with relatively simple formulas used to determine which airports are eligible for how much cash. AIP funding doesn’t cover the entire cost of an airport project, however, normally just 90 percent. That means a busy general aviation airport in need of a $10 million runway upgrade needs access to $1 million before the first shovel of dirt is turned. Rural general aviation airports, with perhaps only $150,000 in annual revenue, are often hard pressed to find even $100,000 to match a $1 million project.

“Most small  general aviation airports are often funded by money from the general revenue of the local community. If the manager needs to ask the city council for that match, they need to be ready to present the benefits of their airport in a way that justify that large sum. The airport might be the only link to larger cities during a natural disaster for instance,” says Olislagers 

Before any project is approved and funded, there are a series of reviews, including environmental and airspace that guarantee nothing about the work will interfere with other people, animals or other air traffic. Only then will the FAA listen to a request for financial assistance. Gardener says it’s also important to remember that, “AIP funds are finite, so you have to make the highest and best use of them. The FAA will only pay for repair projects, for example, not the regular upkeep of facilities like runways or taxiways.”

And just before the money is dispersed, the FAA makes the airport sponsor sign grant assurances, documents that explain the requirement to keep the airport open for business once the community accepts federal money. This is the hot button issue at the heart of the debate around Santa Monica Municipal Airport and certainly was before the closing of Chicago Meigs Field.

The airport managers interviewed for this article agree the best way to make the AIP funding mechanism work most effectively is to create and maintain a good relationship with the local Airports District Office. In Texas, an AIP Block Grant State where the Texas Department of Transportation (TexDot) acts as the AIP office, Jenkinson says, “They realize the importance of reliever airports. I think TexDot does an excellent job of balancing the needs of larger reliever airports that require bigger projects, against smaller community lifeline airports.”

Despite the differences in dollars spent keeping a variety of different airports humming along smoothly, Black explains the philosophy of how everything fits together in the National Airspace System as follows: “Remember when United 232 crashed in Sioux City back in 1989? One-hundred-eleven people perished, but 185 survived. In addition to the skills of Captain Al Haines and his crew on that DC-10, the reason so many people survived was that there was a nearby airport that been properly planned and was operating and equipped for such an emergency. Sioux City Airport personnel just happened to have completed their annual emergency drill a few weeks before the accident. I guarantee you the people who bought tickets on that United flight [between Denver and Chicago] had two airports in mind and never once gave a thought to whether or not there was a good airport available in Sioux City in case of an emergency. [That’s exactly why] AIP funding is there to support the entire airport system.”

BIO: Robert Mark, a 35-year aviation-industry veteran, is CEO of CommAvia, a marketing-communications group delivering leading edge media to the aviation industry. Mark, a commercial pilot and certified flight instructor, has logged 7,000 flying hours in a variety of airliners, business-jets and training airplanes. He also spent 10 years as an air traffic controller and supervisor with the FAA. Rob publishes the award-winning industry blog, He welcomes your comments at [email protected].