Dive Brief:
- In two pieces of good news for U.S. airports this month, the Federal Aviation Administration (FAA) has announced $840 million in Airport Improvement Program (AIP) grants, and President Donald Trump's proposed $17.1 billion fiscal 2020 budget for the FAA has made it through the House Appropriations Committee with $614 million more than requested, putting the new total for the FAA at $17.7 billion.
- This is the first fiscal year 2019 AIP allocation, and the grants will go to more than 380 airports in 47 states. One of the smallest awards was $45,000 for building construction at Marshalltown Municipal Airport in Marshalltown, Iowa, while one of the biggest was $29 million for runway reconstruction at Ted Stevens Anchorage International Airport in Anchorage, Alaska.
- The Appropriations Committee approved another $3.3 billion for AIP grants to be distributed in 2020, plus another $500 million in discretionary funding for airport infrastructure.
Dive Insight:
The funding is welcome as airports attempt to fund much-needed improvements on their own. Lawmakers once again failed to raise the $4.50 Passenger Facility Charge (PFC) that helps airports pay for their capital construction programs. Airports are allowed to tack on a total of $9 in PFC charges for multi-leg trips but cannot exceed $18 per round trip.
Advocacy group Airports Council International-North America, in a report published earlier this year, maintained that the PFC's purchasing power has decreased 50% since 2000 and that at the surcharge's current level, North American airport operators will not be able to make a dent in the estimated $128 billion of capital improvements needed during the next five years.
Airlines also contribute to airport capital improvements, particularly when they have a significant presence at a facility. American Airlines, for instance, is underway with a $1.6 billion renovation of its Los Angeles International Airport (LAX) terminal. Back in October, LAX owner Los Angeles World Airports said the airline-funded project was the biggest single-airport investment American Airlines has ever made.
Delta is also improving its facilities at LAX with a $1.8 billion terminal modernization project. The renovation is part of the airline's $12 billion U.S. capital initiative. Another of those projects is Delta's new $4 billion terminal at LaGuardia International Airport in New York City.
And then there are airports willing to pay for airlines' facilities themselves because of the long-term economic benefit. In May, Dallas-Fort Worth International Airport (DFW) and American Airlines announced that DFW would sink up to $3.5 billion into a sixth terminal for the airline, which uses the airport as its main U.S. hub. The airport's capital program also includes renovations to one of American's existing terminals at DFW.
