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Airport Improvement Program: Issues for Congress

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Publication Date: February 2007

Publisher(s): Library of Congress. Congressional Research Service

Series: RL33891

Topic: Transportation (Air transport)

Abstract:

The Airport Improvement Program (AIP) has been providing federal grants for airport development and planning since the passage of the Airport and Airway Improvement Act of 1982 (P.L. 97-248). AIP funding is usually spent on projects that support aircraft operations such as runways, taxiways, aprons, noise abatement, land purchase, and safety or emergency equipment. The funds obligated for the AIP are drawn from the Airport and Airway Trust Fund (hereafter referred to as the trust fund), which is supported by a variety of user fees and fuel taxes.

The AIP is one of five major sources of airport capital development funding. The other sources are tax-exempt bonds, passenger facility charges (PFCs: a local tax levied on each boarding passenger), state and local grants, and airport operating revenue. Different airports use different combinations of these sources depending on the individual airport's financial situation and the type of project being considered. Small airports are more dependent on AIP grants than large or mediumsized airports. The larger airports, whose projects tend to be much more costly, are more likely to participate in the tax-exempt bond market or finance capital development projects with a PFC.

AIP is currently authorized through September 30, 2007 under Vision 100 -- Century of Aviation Reauthorization Act (P.L. 108-176). The aviation user fees and taxes that support the trust fund are also authorized through September 30, 2007, in this case, under provisions of the Taxpayer Relief Act of 1997 (P.L. 105-34).

The AIP and PFC issues that could be considered during the upcoming reauthorization of the Federal Aviation Administration (FAA) include the national level of need for airport development and the appropriate AIP funding level; the appropriate federal role in airport development; whether an existing federal spending guarantee mechanism should be extended, modified, or eliminated; the criteria for the distribution of funding across airports of different types and sizes; the sufficiency of AIP discretionary funding, especially for major capacity enhancing projects; accommodating new system users such as the Airbus A380 super-jumbo jet and very light jets (VLJs); airport privatization; defederalization of large airports; raising or eliminating the $4.50 ceiling now imposed on PFCs; the use and tax treatment of airport bonds; and noise mitigation funding and eligibility.

During the FAA reauthorization debate in the 110th Congress, virtually all of the policy issues and options concerning AIP will be influenced by the broader budget issues of the adequacy of trust fund revenues and the availability of money for the FAA from the Treasury general fund. Should ample revenues be available, the reauthorization of AIP could maintain the program's structure and perhaps even increase AIP spending. A constrained-budget scenario would probably increase interest in such issues as defederalization or a tightening of program formula funding and eligibility criteria, which could provide cost savings. It could also increase interest in raising or eliminating the PFC ceiling, which could help airports fund more projects, either directly or by supporting increased bonding.

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