Transport service bodies need improvement and modification to stay relevant. The aviation sector is no exception, as its service delivery and infrastructure depend on changes and enhancements. However, accomplishing this objective requires reliable and active funds. Modernization has intensified the movement of people in and out of airport facilities, increasing traffic. The growth has put pressure on US airports due to the failure of the existing infrastructure to keep up with the traffic increase. As such, airports need to work to meet the population’s demands. However, it has become challenging for airports to manage their budgets with increased finances as they attempt to upgrade their infrastructure. A situation that has pushed them to explore different funding sources. The paper examines federal funding of airports and the role of the Airport Improvement Program (AIP) and outlines the problems and possible solutions to airport operations.
Initially, the federal government was uninvolved in running and maintaining airports in the US. The government was only involved in military airports purchasing and repairing WWI military fields. The Air Commerce Act of 1926 banned the use of federal money to maintain and build airports (Kirk, 2007). However, it all changed following the authorization of the Airport Improvement Program (AIP) that licensed the government’s involvement in public airports. The AIP stems from a long history of Acts aimed at the future development and improvement of airports. It funds the making of taxiways, runways, portions of terminal buildings, and land purchases (Kirk, 2007). Additionally, it facilitates buying safety-related equipment, autonomous weather observation systems, noise studies, and airport planning. There have been several amendments to the by-laws of the program to incorporate individuals and small businesses over the years.
However, the AIP grants are only issued to airports that meet specific criteria. Despite funding airport projects, not every airport is eligible for funding. The requirements include being publicly owned when pointed out as a reliever by the FAA while publicly owned and having a scheduled service and a minimum of 2500 annual enplanements (Federal Aviation Administration, 2022). However, the usual operational costs, such as equipment, salaries, and supplies, are not eligible for funding. Eligible projects are concerned with promoting airport capacity, security, environmental, and safety concerns. A sponsor can get grants for rehabilitation projects such as hangars, non aviation development, and terminals (Federal Aviation Administration, 2022). The FAA must ascertain that the projects are justified based on civil aeronautical demand. Additionally, they must meet procurement and Federal environmental requirements. The AIP funds are granted alongside obligations of appropriately using the funds, keeping the airport open, and ensuring airports are in safe and usable condition.
There has been a significant entry of entrepreneurs in the aviation market with the desire to make profits. As such, the new entrances have intensified competition in the industry by offering better services. The insufficient funds for maintaining and modifying public airports have limited their ability to compete with the private sector. Privatized airports offer more passenger-friendly services than state-managed airports as private entrepreneurs make risky luxurious investments, particularly at terminal points (Miller et al., 2020). Although states and local governments own the majority of US airports, the federal government mandates that they be as self-sufficient as possible. As a result, airports get little to no direct taxpayer funding. As a result, airports must run like businesses, generating money to fund operations and carefully budgeting funds for significant improvement projects, which are frequently highly expensive. Without financial support from the Passenger Facility Charge (PFC) and AIP, airports risk failing to update the nation’s aging airport system (Miller et al., 2020). Airports’ financial resources have nearly run out due to the lack of significant updates to funding choices in previous years. The lack of funds for facility upgrades and modernization has caused airports to postpone projects, which has increased costs and lengthened construction schedules.
Additionally, political influence over parastatals is another critical issue that cannot be dismissed. Most parastatals are run by political appointees who must follow their employers’ commands, no matter how morally dubious they may be. Airports face burdensome regulations which impede them from operating like typical businesses (Littlechild, 2012). US airports are run like bureaucracies instead of competitive companies. The imposed laws interfere with funding sources, such as ticket prices, and meticulously monitor the business operations of airports. The rule prohibiting airports from charging users a fee for utilizing the facility—apart from a price-controlled, strictly regulated passenger facility charge—is the most detrimental (Miller et al., 2020). The federal government must approve changes to the airport’s layout, retailer choices, and airport marketing strategies in advertisements. These laws suffocate airports’ capacity to operate as profitable businesses and serve passengers with the services they expect.
The aviation industry needs to revamp the existing structure to gain a stronger foothold in the future. This process must begin with a Congress, and the President prepared to take the necessary actions. There are three key measures to help improve US airport funding. First, the government should remove cumbersome rules that limit airports’ ability to raise and spend revenue (Sargent, 2016). Additionally, it should reduce costly federal taxes, eliminate ineffective government grants, and allow self-sufficiency and privatization to bring US airports into a modernized, free-market funding structure (Sargent, 2016). For instance, the benefit concept should be applied more consistently in public policy regarding airport investment. The benefit principle generally states that those who utilize a public good or service should pay for it. This method enables projects to be authorized or rejected based on their merits. The Passenger Facility Charge (PFC) is already in place at commercial service airports in the United States as a means of financing infrastructure upgrades.
The federal and municipal governments must fund improvements to airports and airline systems as part of their civil obligations to the public and the transportation network. The FAA has realized that money is limited and that any resource accessible on a national, regional, and local level can help the cause. This recognition has led to the federal and state implementation of fuel taxes. With improved government funding in the United States, airports can acquire the necessary infrastructure, improving customer happiness and safety standards. The airline business has been under pressure due to the government’s persistent unwillingness to appropriate many funds, leading to angry customers who must accept inferior service. The goal of the federal and local governments is to participate in all suggested upgrades and modifications actively and to get more involved in the development of the airline system. Although these tasks will cost money, they will ultimately be worthwhile. The AIP will continue to contribute to the costs of renovations that airports need as a result of advancements in technology. It can be predicted that the AIP will keep taking the lead in collecting passenger taxes and fees to pay for all airport-related initiatives across the nation.
References
Federal Aviation Administration. (2022). Overview: What is AIP? Web.
Kirk, R. S. (2007). Airport Improvement Program: Issues for Congress. Library of Congress Washington DC Congressional Research Service. Web.
Littlechild, S. (2012). Regulation and customer engagement. Economics of Energy & Environmental Policy, 1(1), 53-68.
Miller, B. M., Knopman, D., Ecola, L., Phillips, B., Kim, M. K., Edenfield, N.,… & Prosdocimi, D. (2020). US Airport infrastructure funding and financing: Issues and policy options pursuant to section 122 of the 2018 Federal Aviation Administration Reauthorization Act (No. RR-3175). RAND Corporation.
Sargent, M. (2016). End of the runway: Rethinking the Airport Improvement Program and the federal role in airport funding. Heritage Foundation. Web.