AOPA Flight Training - How It All Works: Funding

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Funding

Who Pays for All This?

Airport and Airway Trust Fund image Everyone who uses the air transportation system pays for the costs of developing and running America's National Airspace System (NAS) and a portion of the public-use airports. Included in this group would be people shipping packages, private pilots, airline passengers, and employees flying on corporate shuttles.

Just like the national highway system, much of America's air transportation infrastructure is paid for with a simple tax on all aviation fuel. Whenever an aircraft leaves the ground, it's powered by some type of aviation fuel. State and federal agencies tax this fuel to provide the funds needed to make the NAS work. People who fly pay the fuel tax as part of their ticket price or fuel purchase.

The Airport and Airway Trust Fund

Department of the Treasury logo The Airport and Airway Trust Fund was established on the books of the United States Department of the Treasury in 1971. The money in the Airport and Airway Trust Fund is used to improve America's air transportation system by funding airport improvements, airport repair projects, and modernizing the air traffic control system.

The Airport and Airway Trust Fund receives revenue through taxes on aviation fuel-including aviation gasoline and jet fuel. In addition to fuel taxes, the Airport and Airway Trust Fund also receives revenue through taxes on domestic airline ticket sales, taxes on ticket sales for passengers traveling overseas, and taxes on air freight shipments.

Federal Fuel Taxes

The federal government levies a 19.4-cent-per-gallon tax on the aviation gasoline used by piston-powered propeller aircraft (avgas) and a 21.9-cent-per-gallon tax on jet fuel (Jet A). This tax goes directly to the Airport and Airway Trust Fund.

State Fuel Taxes

When it comes to state aviation fuel taxes, each state is different. For example, Minnesota charges a 5-cent-per-gallon tax on aviation fuel (avgas). California charges 18 cents per gallon for avgas and 2 cents per gallon for turbine fuel; the funds are used to support the state's airport noise mitigation efforts at nine large airline hub airports. In many cases, state aviation fuel taxes are used to fund state contributions to matching grant programs from the federal government, particularly those under the federal Airport Improvement Program.

The Airport Improvement Program (AIP)

Since 1980, airports have gotten a significant capital development funding boost from the federal government in the form of grants. These grants have been issued through the Federal Aviation Administration's Airport Improvement Program (AIP). The AIP provides funds for runway and taxiway construction, airport lighting, weather observation stations, safety area improvements, environmental studies, and more.

The Airport Improvement Program can dramatically amplify the value of local and state funds.

That's because it usually only requires a 10-percent investment by the local agency, while the AIP funds pick up the remaining 90 percent. So a $100,000 investment by a small town can yield $1,000,000 worth of capital improvements to their local community airport. This in turn will typically result in an increase in the economic value of the surrounding community.

The broad objective of the AIP is to assist in the development of a nationwide system of public-use airports adequate to meet the current projected growth of civil aviation. The AIP provides funding for airport planning and development projects at airports included in the National Plan of Integrated Airport Systems (NPIAS).

The highest aviation priority of the United States is the safe and secure operation of the airport and airway system. Therefore, in the administration of the AIP, the Federal Aviation Administration (FAA) gives the highest priority to projects that enhance the safety and security of our airport system.

Other key priorities include maintaining the current airport infrastructure; increasing the capacity of facilities to accommodate growing passenger and cargo traffic volumes; ensuring continued funding availability to the small general aviation (GA) and non-hub commercial service airports; developing reliever airports; developing cargo hub airports; reducing flight delays; converting former military air bases to civilian use; and implementing a variety of other provisions to ensure a safe and efficient airport system.

New terminal building image The AIP provides funds for a wide range of projects throughout America. Atlanta's Hartsfield International Airport constructed taxiways and rehabilitated existing taxiway lighting. Hartsfield's primary reliever airport, Atlanta's DeKalb-Peachtree, acquired land for better noise compatibility with surrounding residents. Alabama's Saint Elmo Airport constructed a new taxiway. Alaska's Arctic Village Airport purchased snow removal equipment. Massachusetts' Marshfield Airport constructed a new terminal building. And California's Palm Springs Regional Airport rehabilitated and modernized their old terminal building.

Other Funding Sources

Parking image Airports also generate revenue through automobile and aircraft parking fees, the rental of terminal space and maintenance buildings, and in some cases the use of passenger facility fees (PFFs)— the $1 to $3 surcharge that airports add to the price of passenger tickets. State and local governments also contribute funding to make sure that their airports remain viable and meet the needs of local businesses and communities. In some cases, state and local governments or airport authorities use tax-exempt bonds to fund major capital improvements.

PDF Downloads:

View the Airport and Airway Trust Fund from the U.S. Treasury (PDF)


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