Airport Finance
Using Airport Grant Funds for Security Projects Has Affected Some Development Projects Gao ID: GAO-03-27 October 15, 2002The events of September 11, 2001 created several new challenges for the aviation industry in ensuring the safety and security of the national airport system. Chief among them is deciding to what extent Airport Improvement Program (AIP) grant funds should be used to finance the new security requirements at the nation's airports. Although many in the aviation industry believe that funding security projects has become even more important in the aftermath of September 11, they also recognize the need to continue funding other airport development projects, such as those designed to enhance capacity in the national airport system. During fiscal year 2002, the Federal Aviation Association (FAA) awarded a total of $561 million, 17 percent of the $3.3 billion available for grants, in AIP grant funds to airports for security projects related to the events of September 11, 2001. This amount is the largest amount awarded to airports for security projects in a single year since the program began in 1982. Based on data provided by FAA, all of the security projects funded with AIP grants since the events of September 11, 2001, met the legislative and program eligibility requirements. The projects, which range from access control systems to terminal modifications, qualified for AIP funding either under eligibility requirements in effect before September 11, 2001, or under subsequent statutory and administrative changes. Although FAA Airport Planning and Programming officials stated that they were able to comply with statutory requirements, set-asides, and other program priorities, the $504 million increase in AIP grand funds for new security projects in fiscal year 2002 has affected the amount of funds available for some airport development projects in comparison with the distribution of AIP grand funds awarded in fiscal year 2001. FAA was able to fully fund these projects, in part, because of a record level of carryover apportionments, which totaled $355 million, and the $84 million in grant funds that were recovered from prior-year projects. However, there were reductions in AIP funding awarded to nonsecurity projects in fiscal year 2002, as compared with fiscal year 2001.
GAO-03-27, Airport Finance: Using Airport Grant Funds for Security Projects Has Affected Some Development Projects
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Report to the Committee on Transportation and Infrastructure, House of
Representatives:
United States General Accounting Office:
GAO:
October 2002:
Airport Finance:
Using Airport Grant Funds for Security Projects Has Affected Some
Development Projects:
AIP Grant Funds:
GAO-03-27:
Contents:
Letter:
Results in Brief:
Background:
FAA Is Awarding More AIP Grant Funds to Airports for Security Projects
in Fiscal Year 2002 Than in Each Previous Year of the Program‘s
History:
AIP Grants Awarded to Airports for Security Projects since September
11, 2001, Met Legislative and Program Eligibility Requirements:
Increase in AIP Funding for Security Projects Has Affected Funding for
Some Airport Development Projects in Fiscal Year 2002 and Could Have a
Greater Effect in Fiscal Year 2003:
Scope and Methodology:
Agency Comments:
Appendix I: List of Runway Projects at Major Airports:
Appendix II: Airports Eligible to Receive AIP Funding:
Glossary:
Tables:
Table 1: Changes in AIP Eligibility for Airport Development Projects,
Since September 11, 2001:
Table 2: Distribution of AIP Grant Funds Awarded for Security Projects
by Airport Type, Fiscal Year 2002:
Table 3: Distribution of AIP Grant Funds Awarded for Security Projects
by Project Type, Fiscal Year 2002:
Table 4: Distribution of AIP Grant Funds by Development Category,
Fiscal Years 2001 and 2002:
Table 5: Distribution of AIP Grant Funds by Airport Type, Fiscal Years
2001 and 2002:
Figure:
Figure 1: AIP Grant Funds Awarded for Security Projects, Fiscal Years
1982 through 2002:
Abbreviations:
AIP: Airport Improvement Program:
ATSA: Aviation and Transportation Security Act:
DOT: Department of Transportation:
FAA: Federal Aviation Administration:
LOI: letter of intent:
NPIAS: National Plan of Integrated Airport Systems:
TSA: Transportation Security Administration:
United States General Accounting Office:
Letter:
October 15, 2002:
The Honorable Don Young, Chairman
The Honorable James L. Oberstar, Ranking Democratic Member
Committee on Transportation and Infrastructure
House of Representatives:
The events of September 11, 2001, created several new challenges for
the aviation industry in ensuring the safety and security of our
national airport system. Chief among them is deciding to what extent
Airport Improvement Program (AIP) grant funds should be used to finance
the new security requirements at the nation‘s airports. While many in
the aviation industry believe that funding security projects has become
even more important in the aftermath of September 11, they also
recognize the need to continue funding other airport development
projects, such as those designed to enhance capacity in the national
airport system.
Recognizing that a clear understanding of how AIP grant funds were
awarded before and after September 11 is an important step in
determining the future funding levels of AIP, as agreed with your
office, we are addressing the following questions:
* How does the amount of AIP funding awarded to airports for security
projects after the events of September 11, 2001, compare with the funds
awarded for security projects before then?
* To what extent did the airport security projects that received AIP
funding after the events of September 11, 2001, meet legislative and
program eligibility requirements?
* How has the use of AIP funding for airport security projects after
the events of September 11, 2001, affected AIP funding for other
airport development projects?
Results in Brief:
During fiscal year 2002, the Federal Aviation Administration (FAA)
awarded a total $561 million in AIP grant funds to airports for
security projects related to the events of September 11, 2001.[Footnote
1] This $561 million represents approximately 17 percent of the $3.3
billion available for AIP grants in fiscal year 2002 and is the largest
amount awarded to airports for security projects in a single year since
the program began in 1982. In contrast, FAA awarded an average of less
than 2 percent of the program‘s total funding to security projects for
fiscal years 1982 through 2001. During this period, AIP grant funds
awarded to airports for security projects ranged from $2 million in
fiscal year 1982 to $122 million in fiscal year 1991, when airports
implemented new security requirements governing access controls,
according to FAA Airport Planning and Programming officials.[Footnote
2] Additionally, the $561 million FAA awarded to airports for security
projects in fiscal year 2002 represents more than an 800 percent
increase over the $57 million for security projects awarded in fiscal
year 2001.
Based on data provided by FAA, all of the security projects funded with
AIP grants since the events of September 11, 2001, met the legislative
and program eligibility requirements. The projects, which range from
access control systems to terminal modifications, qualified for AIP
funding either under eligibility requirements in effect before
September 11, 2001, or under subsequent statutory and administrative
changes. The Aviation and Transportation Security Act (ATSA), passed in
November 2001, amended existing legislation governing AIP eligibility
to permit funding for fiscal year 2002 of any security-related activity
required by law or the Secretary of Transportation after September 11,
2001, and before October 1, 2002. This legislation also permits FAA to
use AIP funds for replacing airport baggage systems and the
reconfiguration of terminal baggage areas to accommodate explosives
detection systems. In addition to these legislative changes, FAA issued
new program guidance that clarified project eligibility requirements as
defined in 49 U.S.C. Section 47102(3) to include, among other items,
surveillance equipment, blast proofing of terminals, and explosives
detection canines for use in terminals.
Although FAA Airport Planning and Programming officials stated that
they were able to comply with statutory requirements, set-asides, and
other program priorities, the $504 million increase in AIP grant funds
for new security projects in fiscal year 2002 has affected the amount
of funds available for some airport development projects in comparison
with the distribution of AIP grant funds awarded in fiscal year 2001.
According to these officials, they fully funded projects related to:
* safety and security;
* noise mitigation and reduction;
* congressional earmarks; and:
* all phased projects that had been previously funded under AIP.
FAA was able to fully fund these projects, in part, because of a record
level of carryover apportionments,[Footnote 3] which totaled $355
million, and the $84 million in grant funds that were recovered from
prior-year projects.
However, there were reductions in AIP funding awarded to nonsecurity
projects in fiscal year 2002, as compared with fiscal year 2001. For
example, there was an almost $156 million decrease in standards
projects and a $148 million decrease in reconstruction projects.
Similar decreases also occurred to the distribution of AIP grant funds
by airport type. Although large and small hub airports received
increases in their AIP funds, nonhub and reliever airports received the
greatest reduction in their funding in fiscal year 2002, as compared
with fiscal year 2001. FAA also deferred three letter-of-intent (LOI)
payments under consideration prior to September 11, 2001, that totaled
$28 million, until fiscal year 2003 or later. The following three
airports did not have discretionary funds included in their scheduled
LOI payments for fiscal year 2002:
* Hartsfield International Airport in Atlanta, Georgia, which is the
busiest airport in the country with almost 40 million enplanements per
year and was one of the most delayed airports in 2000 and 2001, had $10
million for a runway extension deferred.
* Cincinnati/Northern Kentucky Airport in Covington, Kentucky, another
large airport with 11 million enplanements per year, had $10 million
for a new runway deferred.
* Indianapolis Airport in Indianapolis, Indiana, a medium-sized airport
with almost 4 million enplanements per year, had $7.5 million for a new
apron and taxiway deferred.
Airports Council International also reported that airports have delayed
almost $3 billion in airport capital development because of new
security requirements, most of which dealt with terminal developments.
Finally, although the increase in AIP funds for security projects in
fiscal year 2002 has affected funding for other airport projects, the
impact of funding security projects in fiscal year 2003 is unclear. The
impact will depend on a number of policy decisions. These include
determining the extent to which terminal modifications to install
explosives detection systems, which are estimated to cost between $2
billion and $7 billion, should be financed with AIP grant
funds.[Footnote 4]
Background:
The multibillion dollar AIP provides grant funds for capital
development projects at airports included in the National Plan of
Integrated Airport Systems (NPIAS).[Footnote 5] In administering AIP,
FAA must comply with various statutory formulas and set-asides
established by law, which specify how AIP grant funds are to be
distributed among airports (see app. II for a list of airports that are
eligible to receive AIP grant funds). FAA groups the proposed projects
into one of the following seven development categories, according to
each project‘s principal purpose:
* Safety and security includes development that is required by federal
regulation and is intended primarily to protect human life. This
category includes obstruction lighting and removal; fire and rescue
equipment; fencing; security devices; and the construction, expansion,
or improvement of a runway area.
* Capacity includes development that will improve an airport for the
primary purpose of reducing delay and/or accommodating more passengers,
cargo, aircraft operations, or based aircraft. This category includes
construction of new airports; construction or extension of a runway,
taxiway, or apron; and construction or expansion of a terminal
building.
* Environment includes development to achieve an acceptable balance
between airport operational requirements and the expectations of the
residents of the surrounding area for a quiet and wholesome
environment. This category includes noise mitigation measures for
residences or public buildings, environmental mitigation projects,
and the installation of noise-monitoring equipment.
* Planning includes development needed to identify and prioritize
specific airport development needs. This category includes the airport
master plan, airport layout plan, a state system plan study, or an
airport feasibility study.
* Standards include development to bring existing airports up to FAA‘s
design criteria. This category includes the construction,
rehabilitation, or expansion of runways, taxiways, or aprons; the
installation of runway or taxiway lighting; the improvement of airport
drainage; and the installation of weather reporting equipment.
* Reconstruction includes development to replace or rehabilitate
airport facilities, primarily pavement and lighting systems that have
deteriorated due to weather or use. This category includes the
rehabilitation or reconstruction of runways, taxiways, apron pavement,
and airfield lighting.
* Other includes all other development necessary for improving airport
capacity and the safe and efficient operations. This category includes
people movers, airport ground access projects, parking lots, fuel
farms, and training systems. It also includes development for
converting military airfields to civilian use, such as those authorized
by the military airport program.
FAA has traditionally assigned the highest priority to safety and
security projects that are mandated by law or regulation. Shortly after
September 11, in response to increased security requirements and in
exercising the authority granted under the Federal Aviation
Reauthorization Act of 1996, FAA reviewed its AIP eligibility
requirements and made several changes to permit the funding of more
security projects that previously had not been funded by AIP. For
example, FAA broadened the list of eligible projects to include
explosives detection canines, cameras in terminals, and blast proofing
of terminals. According to officials in FAA‘s Airport Planning and
Programming Division, the types of security projects eligible for AIP
funding were expanded because the perceived threat area at an airport
grew from those areas immediately surrounding an aircraft to terminal
areas where large numbers of people congregated. Table 1 summarizes
significant eligibility changes since September 11, 2001.
Table 1: Changes in AIP Eligibility for Airport Development Projects,
Since September 11, 2001:
Project eligibility status: Traditionally eligible to receive AIP
funding that are still eligible; Examples of projects: Computerized
access control for ramp areas, closed-circuit television at ramp access
doors, explosives detection devices used to inspect suspicious
packages, fingerprinting equipment, perimeter fencing, explosives
disposal equipment, centralized security office, police vehicles
identified in security plans, and planning for new security
requirements.
Project eligibility status: Eligible to receive AIP funding since
September 11, 2001; Examples of projects: Explosives detection canines
and kennels, cameras, additional security lighting, motion sensors,
body armor, blast proofing of terminals and glass, checkpoint exit lane
technology, cargo area security equipment or facilities, and land to
construct security facilities..
Project eligibility status: No longer eligible to receive AIP funding
because these projects are now the responsibility of the Transportation
Security Administration; Examples of projects: Air carriers‘ preboard
screening devices (x-ray and metal detection); baggage screening
devices, such as explosives detection systems; metal detection hand
screening wands; and interactive training systems for security
requirements..
Source: GAO‘s presentation of information from FAA.
[End of table]
In November 2001, eligibility for AIP funding was further broadened by
the passage of ATSA, P.L. 107-71. The act amended 49 U.S.C. Section
47102(3) to extend eligibility for AIP funding to any additional
security-related activity required by law or the Secretary of
Transportation after September 11, 2001, and before October 1, 2002.
ATSA also created the Transportation Security Administration (TSA)
within the Department of Transportation (DOT), and assigned it primary
responsibility for ensuring security in all modes of transportation. As
such, TSA is now responsible for funding some airport security-related
projects, a limited number of which FAA had previously funded through
AIP grant funds. These projects include preboard screening devices and
baggage screening equipment, such as explosives detection systems.
FAA Is Awarding More AIP Grant Funds to Airports for Security Projects
in Fiscal Year 2002 Than in Each Previous Year of the Program‘s
History:
In fiscal year 2002, FAA awarded a total of $561 million in AIP grant
funds for airport security projects, which represents about 17 percent
of the $3.3 billion available for obligation.[Footnote 6] As
illustrated
in figure 1, the $561 million is the largest amount awarded for
security
projects in a single year and contrasts sharply with past funding
trends. Since the program‘s inception in 1982, security projects have
accounted for an average of less than 2 percent of the total AIP grant
funds awarded each year. During fiscal years 1982 through 2001, AIP
grant funds awarded to airports for security projects ranged from $2
million in fiscal year 1982 to $122 million in fiscal year 1991, when
airports implemented new security requirements governing access
controls.[Footnote 7] The $561 million FAA awarded to airports for
security projects in fiscal year 2002 represents more than 800-percent
increase over the $57 million for security projects awarded in fiscal
year 2001.
Figure 1: AIP Grant Funds Awarded for Security Projects, Fiscal Years
1982 through 2002:
[See PDF for image]
Note: AIP grant funds awarded in fiscal years 1998 through 2001 were
converted to 2002 constant dollars.
[End of figure]
As shown in table 2, among airport types, nearly all of the $561
million awarded in fiscal year 2002 for security projects was awarded
to large, medium, small, and nonhub airports,[Footnote 8] which is
consistent with where FAA has received the largest number of requests
for AIP grants for security projects. General aviation and reliever
airports received about 1 percent of the $561 million awarded in fiscal
year 2002.
Table 2: Distribution of AIP Grant Funds Awarded for Security Projects
by Airport Type, Fiscal Year 2002:
Dollars in millions.
Airport Type: Large hub; Grant award amount: $278.3; Percentage of
total AIP security funding: 50%.
Airport Type: Medium hub; Grant award amount: 119.4; Percentage of
total AIP security funding: 21.
Airport Type: Small hub; Grant award amount: 108.3; Percentage of
total AIP security funding: 19.
Airport Type: Nonhub; Grant award amount: 44.9; Percentage of total
AIP security funding: 8.
Airport Type: Other commercial service; Grant award amount: 7.0;
Percentage of total AIP security funding: 1.
Airport Type: Reliever and general aviation; Grant award amount: 3.2;
Percentage of total AIP security funding: 1.
Total; Grant award amount: $561; Percentage of total AIP security
funding: 100%.
Source: GAO‘s analysis of AIP grant awards.
[End of table]
AIP Grants Awarded to Airports for Security Projects since September
11, 2001, Met Legislative and Program Eligibility Requirements:
Based on data provided by FAA, all security projects awarded AIP grants
since September 11, 2001, have met legislative and program eligibility
requirements. Most of these projects would have qualified for AIP
funding under eligibility requirements in place prior to September 11,
2001. For example, as shown in table 3, perimeter fencing, surveillance
and fingerprinting equipment, and access control systems, which
together accounted for almost half of AIP funding for security
projects, qualified under traditional eligibility regulations.
Table 3: Distribution of AIP Grant Funds Awarded for Security Projects
by Project Type, Fiscal Year 2002:
Dollars in millions.
Type of security project: Terminal modifications; Grant award amount:
$249.9; Percentage of total security funding: 44.5%.
Type of security project: Access control; Grant award amount: 141.8;
Percentage of total security funding: 25.3.
Type of security project: Surveillance and fingerprinting equipment;
Grant award amount: 51.4; Percentage of total security funding: 9.2.
Type of security project: Perimeter fencing; Grant award amount: 78.1;
Percentage of total security funding: 13.9.
Type of security project: Explosives detection canines and kennels;
Grant award amount: 1.6; Percentage of total security funding: ; 0.3.
Type of security project: Reimbursement of direct costs of meeting
security requirements mandated by ATSA; Grant award amount: 14.2;
Percentage of total security funding: ; ; 2.5.
Type of security project: Other; Grant award amount: 24.1;
Percentage of total security funding: 4.3.
Type of security project: Total; Grant award amount: $561;
Percentage of total security funding: 100%.
Source: GAO‘s analysis of AIP grant awards.
[End of table]
Other projects that would not have qualified for AIP funding prior to
September 11, 2001, such as explosives detection canines and kennels,
are now eligible under legislative and administrative changes
implemented since then. Section 119(a) of ATSA amended 49 U.S.C.
Section 47102(3) to permit funding of any security-related activity
required by law or the Secretary of Transportation after September 11,
2001, and before October 1, 2002. In addition, ATSA also amended 49
U.S.C. Section 47102(3) to make the replacement of baggage conveyor
systems and terminal modifications that the Secretary determines are
necessary to install explosives detection systems eligible for AIP
grants.
In addition to the AIP eligibility changes in ATSA, FAA issued a series
of program guidance letters in the winter of 2002 that either restated
or clarified project eligibility requirements as defined under 49
U.S.C. Section 47102(3). Under FAA‘s Program Guidance Letter 02-2,
requests for AIP grant funds for security projects after September 11,
2001, are divided into the following three categories:
* Unquestionably eligible projects include those that are intended to
prevent unauthorized individuals from accessing the aircraft when it is
parked on aprons, taxiways, runways, or any other part of the airport‘s
operations area.
* Projects eligible with additional justification include automated
security announcements over public address systems and terminal
improvements for checked baggage or passenger screening.
* Projects that appear to exceed known requirements include those
related to areas of a police facility, command and control or
communications centers that support general law enforcement duties, and
equipment federal screeners use to screen passengers and baggage.
Increase in AIP Funding for Security Projects Has Affected Funding for
Some Airport Development Projects in Fiscal Year 2002 and Could Have a
Greater Effect in Fiscal Year 2003:
The unprecedented increase in AIP grant funds awarded to airports for
security projects in fiscal year 2002 has affected the amount of
funding available for some airport development projects, in comparison
with fiscal year 2001. FAA Airport Planning and Programming officials
stated that they were able to fully fund many program priorities,
including:
* all set-aside requirements, such as the noise mitigation and
reduction program and the military airport program;
* all safety projects, including those related to FAA‘s initiatives to
improve runway safety and reduce runway incursions;
* congressional earmarks; and
* all phased projects that had been previously funded with AIP grant
funds, including the 10 runway projects which are being built at
primary airports.[Footnote 9]
According to FAA Planning and Programming officials, a variety of
factors enabled them to reduce the impact of awarding $561 million in
AIP grant funds for security projects. Most notable was the record
level of carryover apportionments, which totaled $355 million, and the
$84 million in grant funds that FAA recovered from prior-year projects.
FAA subsequently converted these funds into discretionary funds and
used $333 of the $439 million to offset the discretionary funds that
were provided for security projects. The remaining $106 million was
used to fund other airport development projects, such as some new
capacity,
standards, and reconstruction projects, which FAA initially believed it
would not be able to fund because of the need to ensure that security
projects were given the highest priority for AIP funding.
However, when comparing grant award amounts for fiscal years 2001 and
2002, the $504-million increase in AIP grant funds for security
projects in fiscal year 2002 contributed to a decrease in the amount of
funding available for nonsecurity development projects. For example, as
shown in table 4, the greatest reduction occurred in standards, which
decreased by $156 million, from almost 30 percent of AIP funding in
fiscal year 2001 to 25 percent of AIP funding in fiscal year 2002. The
next largest reduction occurred in reconstruction, which decreased by
$148 million, from almost 23 percent of AIP funding in fiscal year 2001
to 18 percent in fiscal year 2002. Environment, safety, and capacity
projects also decreased by $97 million, $66 million, and $40 million,
respectively.
Table 4: Distribution of AIP Grant Funds by Development Category,
Fiscal Years 2001 and 2002:
Dollars in millions.
Development category: Capacity; 2001 grant award amount: $517.9; 2002
grant award amounts: $477.6; Difference between 2001 and 2002 grant
award amounts: $-40.3; Percentage of 2001 budget: 15.8%; Percentage
of 2002 budget: 14.8%.
Development category: Environment; 2001 grant award amount: 417.0;
2002 grant award amounts: 319.8; Difference between 2001 and 2002
grant award amounts: -97.2; Percentage of 2001 budget: 12.7;
Percentage of 2002 budget: 9.9.
Development category: Planning; 2001 grant award amount: 55.5;
2002 grant award amounts: 53.5; Difference between 2001 and 2002
grant award amounts: -2.0; Percentage of 2001 budget: 1.7;
Percentage of 2002 budget: 1.7.
Development category: Reconstruction; 2001 grant award amount: 740.7;
2002 grant award amounts: 592.7; Difference between 2001 and 2002
grant award amounts: -147.9; Percentage of 2001 budget: 22.6;
Percentage of 2002 budget: 18.4.
Development category: Safety; 2001 grant award amount: 203.7;
2002 grant award amounts: 137.5; Difference between 2001 and 2002
grant award amounts: -66.2; Percentage of 2001 budget: 6.2;
Percentage of 2002 budget: 4.3.
Development category: Security; 2001 grant award amount: 56.6; 2002
grant award amounts: 561.0; Difference between 2001 and 2002 grant
award amounts: 504.4; Percentage of 2001 budget: 1.7; Percentage of
2002 budget: 17.4.
Development category: Standards; 2001 grant award amount: 968.1;
2002 grant award amounts: 812.4; Difference between 2001 and 2002
grant award amounts: -155.6; Percentage of 2001 budget: 29.5;
Percentage of 2002 budget: 25.2.
Development category: Other; 2001 grant award amount: 323.7; 2002
grant award amounts: 266.8; Difference between 2001 and 2002 grant
award amounts: -56.9; Percentage of 2001 budget: 9.9; Percentage
of 2002 budget: 8.3.
Development category: Totals; 2001 grant award amount: $3,283; 2002
grant award amounts: $3,222; Difference between 2001 and 2002 grant
award amounts: $-62; Percentage of 2001 budget: 100%; Percentage of
2002 budget: 100%.
Source: GAO‘s analysis of AIP grant awards.
[End of table]
Airport Council International also stated that the increase in AIP
funding for security has affected other airport development projects.
It reported that airports have delayed almost $3 billion in airport
capital development, most of which dealt with terminal developments,
because of new security requirements.
According to FAA Airport Planning and Programming officials, the
decreases in AIP funding for the nonsecurity categories cannot be
attributed solely to the increase in funding for security. For example,
they stated that the decrease in the safety category occurred because
the types of projects identified as necessary to comply with Part 139
safety regulations vary from year to year based on a number of factors,
including the results of airport certification inspections and
individual airports‘ equipment retirement policies. The decline in the
environment category, which includes noise mitigation, occurred, in
part, because the amount of discretionary funds available in fiscal
year 2002 was lower than in fiscal year 2001, according to FAA Airport
Planning and Programming officials. The noise mitigation and reduction
program is required by statute to receive 34 percent of available
discretionary funds.
The increase in AIP funding for security also affected the distribution
of AIP grant funds by airport type. As shown in table 5, in comparison
with fiscal year 2001, large and small hub airports received increases
in AIP funding, while all other airports experienced decreases in
fiscal year 2002. AIP funding to large hub airports increased by almost
$111 million, or almost 4 percent of total AIP funding, while funding
to small hub airports increased by almost $32 million, or 1 percent, in
fiscal year 2002. In contrast, the greatest reductions in AIP funding
were among nonhub airports, which decreased from almost $650 million in
fiscal year 2001 to almost $510 million in fiscal year 2002, followed
by reliever airports, which decreased from $213 million in fiscal year
2001 to almost $164 million in fiscal year 2002.
Table 5: Distribution of AIP Grant Funds by Airport Type, Fiscal Years
2001 and 2002:
Dollars in millions.
Airport type: Large hub; 2001 grant award amount: $745.9; 2002
grant award amount: $856.8; Difference between 2001 and 2002 grant
award amount: $110.9; Percentage of 2001 budget: 22.7%; Percentage
of 2002 budget: 26.6%.
Airport type: Medium hub; 2001 grant award amount: 446.9; 2002
grant award amount: 435.6; Difference between 2001 and 2002 grant
award amount: -11.3; Percentage of 2001 budget: 13.6; Percentage
of 2002 budget: 13.5.
Airport type: Small hub; 2001 grant award amount: 475.6; 2002
grant award amount: 507.3; Difference between 2001 and 2002 grant
award amount: 31.7; Percentage of 2001 budget: 14.5; Percentage
of 2002 budget: 15.7.
Airport type: Non hub; 2001 grant award amount: 649.9; 2002 grant
award amount: 509.5; Difference between 2001 and 2002 grant award
amount: -140.4; Percentage of 2001 budget: 19.8; Percentage of
2002 budget: 15.8.
Airport type: Other commercial service; 2001 grant award amount:
59.4; 2002 grant award amount: 49.2; Difference between 2001 and
2002 grant award amount: -10.2; Percentage of 2001 budget: 1.8;
Percentage of 2002 budget: 1.5.
Airport type: General Aviation; 2001 grant award amount: 424.3;
2002 grant award amount: 423.6; Difference between 2001 and 2002
grant award amount: -.7; Percentage of 2001 budget: 12.9;
Percentage of 2002 budget: 13.1.
Airport type: Reliever; 2001 grant award amount: 213.2; 2002
grant award amount: 163.8; Difference between 2001 and 2002 grant
award amount: -49.3; Percentage of 2001 budget: 6.5; Percentage of
2002 budget: 5.1.
Airport type: System planning; 2001 grant award amount: 268.1;
2002 grant award amount: 275.7; Difference between 2001 and 2002
grant award amount: 7.6; Percentage of 2001 budget: 8.2;
Percentage of 2002 budget: 8.6.
Airport type: Totals; 2001 grant award amount: $3,283; 2002
grant award amount: $3,222; Difference between 2001 and 2002
grant award amount: $-62; Percentage of 2001 budget: 100%;
Percentage of 2002 budget: 100%.
Source: GAO analysis of AIP grant awards.
[End of table]
The increase in AIP funding for security projects contributed to the
decreases in the amount of funding available for some airports. For
example, the increase in AIP funding to large hub airports can be
attributed to their proportionally higher security needs. In the case
of the decrease in AIP funding to nonhub airports, FAA Airport Planning
and Programming officials said that their security needs were much
lower than those of large hub airports, accounting for only $44
million, or 8 percent, of the $561 million awarded in fiscal year 2002.
The unprecedented $504 million increase in funding for security also
affected the LOI payment schedules that FAA planned to issue in fiscal
year 2002. FAA deferred three LOI payments that were under
consideration prior to September 11, 2001, that totaled $28 million,
until fiscal year 2003 or later. Letters of intent are an important
source of long-term funding for capacity projects at large airports.
These letters represent a nonbinding commitment from FAA to provide
multiyear funding to airports beyond the current authorization period.
As a result, airports are able to proceed with projects without waiting
for future AIP grant funds with the understanding that allowable costs
will be reimbursed. The following three airports did not have
discretionary funds included in their scheduled LOI payments for fiscal
year 2002:
* Hartsfield International Airport in Atlanta, Georgia, which is the
busiest airport in the country, with almost 40 million enplanements per
year. It also was one of the most delayed airports in 2000 and 2001,
and had $10 million for a runway extension deferred.
* Cincinnati/Northern Kentucky Airport in Covington, Kentucky, a large
airport with 11 million enplanements per year, had $10 million
deferred.
* Indianapolis Airport in Indianapolis, Indiana, a medium-sized airport
with almost 4 million enplanements per year, had $7.5 million for a new
apron and taxiway deferred.
According to FAA Airport Planning and Programming officials, prior to
September 11, 2001, the agency had planned to include discretionary
funding in fiscal year 2002 for the LOI payments scheduled to these
three airports. However, their funding has been deferred until fiscal
year 2003 or later because of the need to ensure that adequate funds
would be available for security projects. Nontheless, these officials
stated that for each of these three airports, the letters of intent
were adjusted upward to compensate the airports for the additional
carrying costs they incurred because the payments were deferred.
Moreover, FAA Airport Planning and Programming officials believe that
reduced funding for capacity projects in fiscal year 2002 will not have
dramatic consequences in the immediate future because of the current
decline in passenger traffic. However, they stated that if capacity
projects continue to be underfunded, the congestion and delay problems
that plagued the system in 2000 and 2001 could return when the economy
recovers. Similarly, FAA officials stated that although a 1-year
reduction in AIP funding for reconstruction projects would not have a
dramatic impact on runway pavement conditions, a sustained reduction
could cause significant deterioration in pavement conditions.
Finally, the effect of increasing AIP grant funds for security projects
in fiscal years 2003 and beyond cannot currently be estimated with any
certainty. Nonetheless, preliminary indications suggest that the total
amount of funding needed for security projects in fiscal years 2003 and
beyond could be substantially higher than in fiscal year 2002 and
previous years. For example, security projects in the 1998 through 2002
NPIAS report to Congress totaled $143 million, while security requests
in the current NPIAS, 2001 through 2005, have increased to $1.6
billion. Most of the uncertainty over how much funding is needed is
dependent on pending decisions by Congress in conjunction with DOT,
TSA, and FAA regarding how TSA plans to fund the terminal modifications
needed to install and deploy explosives detection systems and the
extent to which AIP grant funds might be needed to help cover these
costs. DOT‘s Inspector General testified that capital costs associated
with deploying the new explosives detection systems alone could exceed
$2.3 billion. Representatives of Airport Council International and the
American Association of Airport Executives stated that the costs for
modifying terminals and baggage conveyor system to accommodate
explosives detection systems could be as high as $7 billion. In P. L.
107-206, Congress appropriated $738 million to the Transportation
Security Administration for terminal modifications to install
explosives detection systems.
Scope and Methodology:
To determine how the amount of AIP grant funds awarded to airports for
security projects before September 11, 2001, compared with funds
awarded after September 11, we obtained AIP expenditure data for fiscal
years 1982 through 2002 from FAA‘s AIP database that showed the amounts
of AIP grant funds awarded, the types of projects funded, and the types
of airports that received the funds. To identify funding trends, we
compared the amount of AIP funding awarded for security-related
projects with other airport development projects for fiscal years 1998
through 2002. To develop a more realistic comparison of how much AIP
funding has increased over time, we converted nominal dollar figures
into constant 2002 dollars, using fiscal year price indexes constructed
from gross domestic product price indexes prepared by the U.S.
Department of Commerce. We subsequently discussed the data and our
findings with FAA Airport Planning and Programming officials. While we
verified the accuracy of the AIP expenditure data, we did not
independently review the validity of FAA‘s AIP database, from which the
data were derived.
To determine whether the new security projects met legislative and
program eligibility requirements, we reviewed title 49 of U.S.C., ATSA,
and FAA‘s regulations and recently issued program guidance for
eligibility requirements. We also interviewed FAA Airport Planning and
Programming officials to clarify questions regarding eligibility
requirements and to obtain additional information on the distribution
of AIP grant funds.
To assess how the use of AIP grant funds for security projects affected
other airport development projects, we compared the amount of AIP grant
funds awarded in fiscal years 2001 and 2002 by development category and
airport type. We also interviewed FAA, TSA, and Airport Council
International officials and reviewed the preliminary results of the
Council‘s survey of its members regarding changes to the status of
their capital development projects due to the events of September 11,
2001.
Agency Comments:
We provided the Department of Transportation with a copy of the draft
report for its review and comment. FAA and TSA officials agreed with
information contained in this report and provided some clarifying and
technical comments that we made where appropriate.
We performed our work from June through October 2002 in accordance with
generally accepted government auditing standards.
Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 10 days from the date of this letter.
At that time, we will send copies to interested congressional
committees; the Secretary of Transportation; the Administrator, FAA;
and the Administrator, TSA. We will also make copies available to
others upon request. This report is also available at no charge on
GAO‘s Web site at http://www.gao.gov.
Please contact me or Tammy Conquest at (202) 512-2834 if you have any
questions. In addition, Jean Brady, Jay Cherlow, David Hooper, Nancy
Lueke, and Richard Swayze made key contributions to this report.
Gerald L. Dillingham, Ph.D
Director, Physical Infrastructure Issues:
Signed by Gerald L. Dillingham, Ph.D:
[End of section]
Appendix I: List of Runway Projects at Major Airports:
Airport: William B Hartsfield Atlanta International; Runway status:
Under construction; Projected opening date: 2006.
Airport: Cleveland-Hopkins International; Runway status: Under
construction; Projected opening date: 2004.
Airport: Denver International; Runway status: Under construction;
Projected opening date: 2003.
Airport: Detroit Metropolitan Wayne County; Runway status: Construction
completed; Projected opening date: Opened 2001.
Airport: George Bush Intercontinental; Runway status: Under
construction; Projected opening date: 2003.
Airport: Miami International; Runway status: Under construction;
Projected opening date: 2003.
Airport: Minneapolis-St. Paul International/World-Chamberlain; Runway
status: Under construction; Projected opening date: 2004.
Airport: Orlando International; Runway status: Under construction;
Projected opening date: 2003.
Airport: Lambert-St Louis International; Runway status: Under
construction; Projected opening date: 2006.
Airport: Seattle-Tacoma International; Runway status: Under
construction; Projected opening date: 2006.
Source: GAO‘s presentation of data provided by FAA.
[End of table]
[End of section]
Appendix II: Airports Eligible to Receive AIP Funding:
[See PDF for image]
[End of figure]
[End of section]
Glossary:
Apportionment funds:
Statutory provisions require that AIP funds be apportioned by formula
each year to specific airports or types of airports. Such funds are
available to airports in the year they are first apportioned and they
remain available for the 2 fiscal years immediately following (or 3
fiscal years for nonhub airports). Recipients of apportioned funds are
primary airports, cargo service airports, states and insular areas, and
Alaska.
Apron:
The paved part of an airport‘s airfield immediately adjacent to
terminal areas and hangars.
Capacity, safety, security, and noise projects:
Grants that are to be used for preserving or enhancing the capacity,
safety, security, and carrying out noise compatibility planning and
programs at primary and reliever airports.
Cargo service airports:
Airports that, in addition to any other air transportation services
that may be available, are served by aircraft providing air
transportation only of cargo with a total annual landing weight (the
weight of aircraft transporting only cargo) of more than 100 million
pounds.
Carryover apportionments:
Funds apportioned for primary or cargo service airports, states, and
Alaskan airports remain available for obligation during the fiscal year
for which the amount was apportioned and the 2 fiscal years immediately
after that year (or the 3 fiscal years immediately following that year
in the case of nonhub airports). When such funds are not used in the
fiscal year of the apportionment, they are carried over to following
year(s).
Commercial service airports:
Airports that handle regularly scheduled commercial airline traffic and
have at least 2,500 annual passenger enplanements.
Discretionary funds:
Those funds generally remaining after apportionment funds are
allocated, but a number of statutory set-asides are established to
achieve specified funding minimums.
Enplanements:
Passenger boardings.
General aviation airports:
Airports that have no scheduled commercial passenger service.
Large hub airports:
Primary airports that have at least 1 percent of all annual
enplanements.
Letter of Intent:
A letter FAA issues to airports stating that it will reimburse them for
the costs associated with an airport development project according to a
defined schedule when funds become available. FAA uses this letter when
its current obligating authority is not timely or adequate to meet an
airport‘s planned schedule for a project.
Medium hub airports:
Primary airports that have between .25 percent and 1 percent of all
annual enplanements.
Military airport program:
Under this program, a special set-aside of the discretionary portion of
AIP is to be used for capacity and/or conversion-related projects at up
to 15 current and former military airports. Such airports are eligible
to participate in the program for 5 fiscal years and may be extended
for 5 more years if approved by the Secretary of Transportation. The
airports are designated as a civil commercial service or reliever
airport in the national airport system. Approved projects must be able
to reduce delays at an existing commercial service airport that has
more than 20,000 hours of annual delays in commercial passenger
aircraft takeoffs and landings.
National airport system:
The set of airports designated by FAA as providing an extensive network
of air transportation to all parts of the country. It is comprised of
commercial service airports and general aviation airports.
Noise projects:
AIP projects that reduce airport-related noise or mitigate its effects.
Eligible noise projects generally fall into the following categories:
land acquisition, noise insulation, runway and taxiway construction
(including associated land acquisition, lighting, and navigational
aids), noise-monitoring equipment, noise barriers, and miscellaneous.
Nonhub airports:
Primary airports that have over 10,000 annual enplanements, but less
than .05 percent of all annual enplanements.
Obligation:
An obligation occurs when FAA makes an award to an airport sponsor,
thereby obligating FAA to fund a project under AIP.
Other commercial service airports:
Airports that have between 2,500 and 10,000 annual passenger
enplanements from scheduled commercial service.
Primary airports:
Airports that have 10,000 or more annual passenger enplanements from
scheduled commercial service.
Reliever airports:
Airports designated by FAA to relieve congestion at a commercial
service airport and to provide improved general aviation access to the
overall community. Only general aviation airports have been designated
as reliever airports.
Set-aside funds:
The portion of discretionary funds set-aside designed to achieve
specified funding minimums established by Congress.
Small airport fund:
The passenger facility charge program requires large and medium hub
airports participating in the program to return a portion of their AIP
apportionment funds. Airports charging a passenger facility charge of
$3.00 or less must return up to one-half of their AIP apportionment
funds, and airports charging over a $3.00 passenger facility charge
must return up to 75 percent of their AIP apportionment fund‘s.
Congress requires most of the returned AIP funds to be put in the small
airport fund, which FAA redistributes to small airports.
Small hub airports:
Primary airports that have from .05 percent to .25 percent of all
annual enplanements.
State block grant program:
States assume responsibility for administration of AIP grants at
airports classified as other than primary (other commercial service,
reliever, and general aviation airports). Each state is responsible for
determining which locations within its jurisdiction will receive funds
and for ongoing project administration. This program is available only
to selected states.
System planning:
AIP grants for the purpose of studying aspects of a regional or
statewide airport system. These studies usually include primary and
nonprimary airports. Most system planning grants are issued to
metropolitan planning organizations or state aviation agencies.
Taxiway:
Paved sections of an airport‘s airfield that connect runways with
aprons.
FOOTNOTES:
[1] In addition, in fiscal year 2001, FAA awarded $13 million for
security projects related to the events of September 11, 2001.
[2] The dollar amounts of AIP grant funds awarded in fiscal years 1982
through 2001 were converted to 2002 constant dollars. AIP funds awarded
for security projects in 1991 totaled $99 million in nominal dollars.
[3] This term and others that are used in this report are defined in a
glossary at the end of this report.
[4] In P. L. 107-206, Congress appropriated $738 million to the
Transportation Security Administration for terminal modifications to
install explosives detection systems.
[5] NPIAS is a 5-year plan that identifies airports development
projects that are critical to ensuring a safe and efficient national
airspace system.
[6] In addition, in fiscal year 2001 FAA awarded $13 million for
security projects related to the events of September 11, 2001.
[7] AIP funds awarded for security projects in 1991 totaled $99 million
nominal dollars.
[8] For purposes of this analysis, we used FAA‘s definition of large,
medium, and small hub airports, whereby large and medium hub airports
have at least 0.25 percent of all passenger enplanements and small hub
airports have between .05 and .25 percent of all enplanements.
[9] See appendix I for list of runway projects at major airports.
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