Identify the Airport’s Potential Funding Sources

Airport capital improvement projects may be funded through a combination of sources including federal, state, local, and third party sources. Regardless of the source, the best approach for gaining funding support is to develop a solid presentation of the need for the project including a clear explanation of its purpose, its benefits and its beneficiaries.

It could be argued that identifying those served by the improvement and presenting them with a compelling argument in support of the project is the first and most important step in the funding process. This is because well-supported projects seem to ‘find’ a way to get funded. When elected and appointed officials are faced with making funding decisions, they may be persuaded by a collection of project supporters. Generally speaking, the broader the base of support and or the deeper the stakeholder commitment to the project, the stronger the chances for securing funding at any level.

Funding for airport development projects at small airports is explored in detail in ACRP Report 16, Guidebook for Managing Small Airports, Chapter 2, Airport Finance, and briefly in Federal, State and Local Funding Sources for Airports. As mentioned previously in this chapter, airport improvements (particularly large programs) are typically funded through a combination of sources, mostly revenues from airlines and other tenants.

Additional airport funding can come from a wide variety of sources. For instance, airports with scheduled commercial service may be eligible for TSA funding for security-related improvements in support of TSA’s mission. Moreover, depending on the nature of the improvement project and the socioeconomic characteristics of the community surrounding the airport, there may be other grants available from other federal agencies. However, airport grants from federal agencies other than the FAA and TSA are uncommon. One example comes from the US Department of Commerce which may offer funding assistance to boost the socioeconomic standing of a particular region as a result of a severe economic downturn or a natural disaster. It is prudent for the airport manager to be aware of this kind of funding.

The FAA develops a capital improvement plan for each ADO that lists upcoming projects and the expected year of funding need. The airport manager should strive to develop a comprehensive understanding of the FAA’s capital improvement planning process and funding practices of all likely federal and state agency funding sources. In this way, the airport manager will be in the best possible position to secure funding from the FAA for worthy projects.

Airports with scheduled commercial passenger and cargo service are eligible for PFCs, which are collected from passengers and on cargo waybills by the airlines on behalf of the airport. PFCs can be used to support the local match for AIP-funded projects, and as a primary project funding source. Airports must prepare a facility charge application that tells the airlines what the funds will be used for. Airlines have the opportunity to comment and object to facility charge applications. Although airlines only act in a consultation role, successful implementation of a facility charge program requires communication between the airport manager and the airlines to convey the benefits of the proposed projects.

Airports that are not eligible for FAA funding may be eligible for funding from their state DOT. State grants are typically equal to or less than AIP entitlement grants, and less than AIP discretionary grants. State DOTs vary greatly in their funding availability and in the types of projects they will fund. State grants typically go to airports with projects considered too low of a priority to compete for FAA funding, and to airports that have federal funds but need help with the local match. States operate a capital improvement plan similar to that of the FAA, and the airport manager is responsible for coordinating funding requirements with the state.

Most GA airports and many smaller commercial service airports receive some form of financial assistance from their sponsor. The level of assistance will depend on airport need and sponsor availability – it may be limited to funding operating expenses, or the sponsor may help provide some or all of the local match. Sponsors can implement special tax districts and issue bonds to support airport improvement projects; however, these funding sources typically require voter approval. Tax districts can be used to support a variety of airport improvement projects, and provide sponsors with a degree of flexibility. Bonded improvement projects require repayment, so they make sense when the airport has a steady stream of revenue, or is constructing an improvement that will generate revenue.

In summary, all of the following will bolster efforts to secure project funding:

  • Know the funding process
  • Be creative in the identification of project supporters
  • Be able to clearly articulate the benefits of the proposed project

Resources

  • FAA  AIP

    The website for the FAA's Airport Improvement Program including definitions and links to a variety of resources.

  • ACRP Report 121: Innovative Revenue Strategies - An Airport Guide

    This report describes a broad range of tools and techniques for airport operators to improve revenue streams, recover costs, or achieve operational efficiencies.

  • ACRP Report 16 Guidebook for Managing Small Airports

    This report introduces the myriad issues facing small airports in the United States to airport practitioners. This report presents the critically important issues that these practitioners will frequently encounter while wearing the airport manager’s hat.

Tools