There has been a lot of controversy over the years about the federal government’s involvement and financial obligation to the airway industry. The construction of runways and taxiways are the largest development cost at hub airports and terminal development is second (Sanchez, 2006). The introduction of the Airport Improvement Plan (AIP) was the start of any significant federal funding for airports and the air industry. There has been an interest in privatization of airports and several attempts. This paper will discuss some of the basic information about the AIP and airport funding.
The first federal assistance given to airports or the air industry was the Works Progress Administration (WPA). In the 1930s, almost $150 million dollars was spent as a part of the WPA projects on airports. Airport expenses and funding were considered a local responsibility until World War II. It was during WWII that there was first any significant federal support for airport construction. After the war the federal government continued to aid airports, but at a lower level. The federal government contributed greatly in the 1960s when airports had to be upgraded due to the use of commercial jets (Kirk, 2009).
The Airport and Airway Development Act of 1970 set the basis for the Airport Development aid Program (ADAP) and the Planning Grant Program (PGP). It was put in place to help finance reconstruction due to the congestion problems Kirk, 2009). The act established the Aviation Trust Fund. The Aviation Trust Fund is the major source of federal aid to airports (Kirk, 2009). Due to debating about the possible “defederalization” of airports, Congress did not support the trust fund during 1981-1982.
The Wendell H. ford Aviation Investment and Reform Act for the 21st Century of 2000 (AIR-21) was meant to alleviate the problems and issues faced by the air industry. Some of the problems were deciding on the passenger facility charges and the spending and distribution of moneys.
Although the AIR21 left the overall structure of the AIP the same, the AIAR-21 did set several rules. The first is that legislation must not be considered that does not use the trust fund revenues for aviation. The second rule states that the budgets for the FAA’s Operations and Maintenance or Research, engineering and Development budgets can only be considered if the budget for the AIP and the Facilities and Equipment budgets are at their authorized levels. The second rule has not been enforced in recent years (Kirk, 2009).
The AIR-21 increased annual funding for airports by almost $10 billion (Young & Wells, 2011, p. 84). The formula for funding airports was changed to increase the amounts available. They also increased the PFC per passenger to $4, with a stipulation. This meant that large and medium hubs would return or not get 75% of their AIP funds and leave more funding for smaller airports (Kirk, 2009). The AIR-21 funding was meant to help large and...