Study: U.S. Airports, ATC System Should Be Self Supporting

A new Reason Foundation study argues that U.S. passenger airports could support themselves and fund capacity improvements with user fees and long-term financing, eliminating the need for government grants from the Airport Improvement Program (AIP). The study by the libertarian research organization also proposes spinning off the FAA’s Air Traffic Organization (ATO) into a separate federal entity that charges users for ATC services.

The study, titled “Funding Important Transportation Infrastructure in a Fiscally Constrained Environment,” aims to promote solutions that would distance the U.S. transportation system from ongoing budget and debt-limit crises in Congress, according to the foundation. “If you look at our outdated air traffic control system or our aging Interstate highways, you’ll see Congress has long struggled to provide reliable funding streams for infrastructure projects,” study author Robert Poole said in a release. “Fortunately, there are numerous practical changes we can implement to rebuild and reinvigorate our infrastructure within the current economic climate.”

A 2011 survey by Airports Council International-North America estimated that annual capital investment needs at U.S. airports total $16 billion for runways, taxiways, terminals and other projects through 2015. AIP grants, generated by passenger ticket taxes, fuel taxes and other fees, account for just 22 percent of airports’ capital funding sources, the Reason study notes. Revenue bonds backed by airport operating revenues, including local passenger facility charges (PFCs), now federally capped at $4.50 per enplaned passenger, provide more than half of capital funding.

The AIP also “cross subsidizes” airports, according to the Reason study. Larger, hub airports that host 70 percent of passengers receive just 17 percent of AIP grants; the balance gets distributed among smaller hubs, non-hubs and general aviation airports. “Rather than battling with general aviation interests over how to split up the AIP pie, a better solution would be to liberate passenger airports from AIP altogether, allowing them to self-fund via PFCs and all their other user-derived revenue sources without a federal limit,” states the study.

The idea of recasting the ATC system as a self-supporting operation dates back to at least 1985, the study notes. It recommends separating the ATO from the FAA and making it a user-funded entity, analogous to the air navigation service providers of Canada, Australia, the UK and other countries. The new entity could issue long-term revenue bonds to finance the technology and facility improvements needed for the NextGen ATC modernization effort, expected to cost the government and airspace users $50 billion.