	Airports’ Funding Sources Vary

In 1996, bonds, AIP, and passenger facility charges provided about $6.6 billion of the $7 billion in airport funding. The amount and type of funding vary considerably by the type of airport. The nation’s 71 largest (large and medium hub) airports, which accounted for almost 90 percent of all passenger traffic, had more than $5.5 billion in funding in 1996, while the 3,233 other national system airports had about $1.5 billion. By contrast, the other 3,233 smaller national system airports obtained just 14 percent of their funding from bonds. Past Funding Levels Are Less Than Planned Development

Airports’ planned capital development over the next 5 years may total as much as $10 billion per year, or $3 billion more per year than their 1996 funding. Planned spending for future years is shown by the relative priority of the projects, as follows:
FAA’s highest priorities (shown as reconstruction and mandates) total $1.4 billion per year and are for projects to meet safety, security, and environmental requirements, including noise mitigation, and for projects that maintain the existing infrastructure (reconstruction). Other high-priority projects—primarily, those adding capacity—add another $1.4 billion per year. Other projects of a relatively lower priority—such as those bringing airports up to FAA’s design standards—add another $3.3 billion per year, for a total of $6.1 billion per year. Finally, airports anticipate another $3.9 billion per year in projects that are not eligible for AIP—such as those expanding commercial space in terminals and constructing parking garages. Current funding at the 3,233 small, nonhub, other commercial service and at general aviation airports is a little over half of the estimated cost of their planned development, thus producing a difference of about $1.4 billion. Effect of Proposals to Increase Airport Funding Varies

Evaluating the various proposals to provide additional funding for airport development involves the consideration of the trade-offs among the various funding types as well as the potential effect that each proposal would have on airports. For the other 3,233 smaller national system airports, however, current funding is only about half of their planned development and even less for some categories of these airports. The Airport Improvement Program is a more significant source of funding for smaller airports than for larger ones.
Why GAO Did This Study

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.

What GAO Found

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.