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

GAO-03-27
Page i GAO-03-27 AIP Grant Funds

Letter 1

Results in Brief 1

Background 4

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 7

AIP Grants Awarded to Airports for Security Projects since

September 11, 2001, Met Legislative and Program Eligibility

Requirements 9

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 11

Scope and Methodology 15

Agency Comments 16

Appendix I List of Runway Projects at Major Airports 17

Appendix II Airports Eligible to Receive AIP Funding 18

Glossary 19

Tables

Table 1: Changes in AIP Eligibility for Airport Development

Projects, Since September 11, 2001 6

Table 2: Distribution of AIP Grant Funds Awarded for Security

Projects by Airport Type, Fiscal Year 2002 9

Table 3: Distribution of AIP Grant Funds Awarded for Security

Projects by Project Type, Fiscal Year 2002 9

Table 4: Distribution of AIP Grant Funds by Development

Category, Fiscal Years 2001 and 2002 12

Table 5: Distribution of AIP Grant Funds by Airport Type, Fiscal

Years 2001 and 2002 13

Contents
Page ii GAO-03-27 AIP Grant Funds

Figure

Figure 1: AIP Grant Funds Awarded for Security Projects, Fiscal

Years 1982 through 2002 8

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
Page 1 GAO-03-27 AIP Grant Funds

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?

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, 2001.1

 This $561 million

 1

In addition, in fiscal year 2001, FAA awarded $13 million for security projects related to

the events of September 11, 2001.

United States General Accounting Office

Washington, DC 20548

Results in Brief
Page 2 GAO-03-27 AIP Grant Funds

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.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

 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.
Page 3 GAO-03-27 AIP Grant Funds

• 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,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

 3

This term and others that are used in this report are defined in a glossary at the end of this

report.
Page 4 GAO-03-27 AIP Grant Funds

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.4

The multibillion dollar AIP provides grant funds for capital development

projects at airports included in the National Plan of Integrated Airport

Systems (NPIAS).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 noisemonitoring equipment.

 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.

Background
Page 5 GAO-03-27 AIP Grant Funds

• 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.
Page 6 GAO-03-27 AIP Grant Funds

Table 1: Changes in AIP Eligibility for Airport Development Projects, Since

September 11, 2001

Project eligibility status Examples of projects

Traditionally eligible to receive AIP funding

that are still eligible

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

Eligible to receive AIP funding since

September 11, 2001

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.

No longer eligible to receive AIP funding

because these projects are now the

responsibility of the Transportation Security

Administration

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.

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.
Page 7 GAO-03-27 AIP Grant Funds

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.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.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.

 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.

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
Page 8 GAO-03-27 AIP Grant Funds

Figure 1: AIP Grant Funds Awarded for Security Projects, Fiscal Years 1982 through 2002

Note: AIP grant funds awarded in fiscal years 1998 through 2001 were converted to 2002 constant

dollars.

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,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.

 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.
Page 9 GAO-03-27 AIP Grant Funds

Table 2: Distribution of AIP Grant Funds Awarded for Security Projects by Airport

Type, Fiscal Year 2002

Dollars in millions

Airport type

Grant award

amount

Percentage of total

 AIP security funding

Large hub $278.3 50%

Medium hub 119.4 21

Small hub 108.3 19

Nonhub 44.9 8

Other commercial service 7.0 1

Reliever and general aviation 3.2 1

Total $561 100%

Source: GAO’s analysis of AIP grant awards.

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

Grant award

amount

Percentage of total

security funding

Terminal modifications $249.9 44.5%

Access control 141.8 25.3

Surveillance and fingerprinting

equipment 51.4

9.2

Perimeter fencing 78.1 13.9

Explosives detection canines and

kennels 1.6 0.3

Reimbursement of direct costs of

meeting security requirements

mandated by ATSA 14.2 2.5

Other 24.1 4.3

Total $561 100%

Source: GAO’s analysis of AIP grant awards.

AIP Grants Awarded

to Airports for

Security Projects

since September 11,

2001, Met Legislative

and Program

Eligibility

Requirements
Page 10 GAO-03-27 AIP Grant Funds

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.
Page 11 GAO-03-27 AIP Grant Funds

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.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

 9

See appendix I for list of runway projects at major airports.

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
Page 12 GAO-03-27 AIP Grant Funds

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

2001 grant award

amount

2002 grant award

amounts

Difference between

2001 and 2002 grant

award amounts

Percentage of

2001 budget

Percentage of

2002 budget

Capacity $517.9 $477.6 $-40.3 15.8% 14.8%

Environment 417.0 319.8 -97.2 12.7 9.9

Planning 55.5 53.5 -2.0 1.7 1.7

Reconstruction 740.7 592.7 -147.9 22.6 18.4

Safety 203.7 137.5 -66.2 6.2 4.3

Security 56.6 561.0 504.4 1.7 17.4

Standards 968.1 812.4 -155.6 29.5 25.2

Other 323.7 266.8 -56.9 9.9 8.3

Totals $3,283 $3,222 $-62 100% 100%

Source: GAO’s analysis of AIP grant awards.

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.
Page 13 GAO-03-27 AIP Grant Funds

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

2001 grant award

amount

2002 grant award

amount

Difference between

2001 and 2002 grant

award amount

Percentage of

2001 budget

Percentage of

2002 budget

Large hub $745.9 $856.8 $110.9 22.7% 26.6%

Medium hub 446.9 435.6 -11.3 13.6 13.5

Small hub 475.6 507.3 31.7 14.5 15.7

Non hub 649.9 509.5 -140.4 19.8 15.8

Other commercial service 59.4 49.2 -10.2 1.8 1.5

General Aviation 424.3 423.6 -.7 12.9 13.1

Reliever 213.2 163.8 -49.3 6.5 5.1

System planning 268.1 275.7 7.6 8.2 8.6

Totals $3,283 $3,222 $-62 100% 100%

Source: GAO analysis of AIP grant awards.

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 longterm 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
Page 14 GAO-03-27 AIP Grant Funds

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
Page 15 GAO-03-27 AIP Grant Funds

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.

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

Scope and

Methodology
Page 16 GAO-03-27 AIP Grant Funds

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.

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

Agency Comments
Appendix I: List of Runway Projects at Major

Airports

Page 17 GAO-03-27 AIP Grant Funds

Airport Runway status Projected opening date

William B Hartsfield Atlanta International Under construction 2006

Cleveland-Hopkins International Under construction 2004

Denver International Under construction 2003

Detroit Metropolitan Wayne County Construction completed Opened 2001

George Bush Intercontinental Under construction 2003

Miami International Under construction 2003

Minneapolis-St. Paul International/World-Chamberlain Under construction 2004

Orlando International Under construction 2003

Lambert-St Louis International Under construction 2006

Seattle-Tacoma International Under construction 2006

Source: GAO’s presentation of data provided by FAA.

Appendix I: List of Runway Projects at Major

Airports
Appendix II: Airports Eligible to Receive AIP

Funding

Page 18 GAO-03-27 AIP Grant Funds

Appendix II: Airports Eligible to Receive AIP

Funding
Glossary

Page 19 GAO-03-27 AIP Grant 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.

The paved part of an airport’s airfield immediately adjacent to terminal

areas and hangars.

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.

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.

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).

Airports that handle regularly scheduled commercial airline traffic and

have at least 2,500 annual passenger enplanements.

Those funds generally remaining after apportionment funds are allocated,

but a number of statutory set-asides are established to achieve specified

funding minimums.

Passenger boardings.

Glossary

Apportionment funds

Apron

Capacity, safety, security,

and noise projects

Cargo service airports

Carryover apportionments

Commercial service

airports

Discretionary funds

Enplanements
Glossary

Page 20 GAO-03-27 AIP Grant Funds

Airports that have no scheduled commercial passenger service.

Primary airports that have at least 1 percent of all annual enplanements.

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.

Primary airports that have between .25 percent and 1 percent of all annual

enplanements.

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.

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.

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), noisemonitoring equipment, noise barriers, and miscellaneous.

Primary airports that have over 10,000 annual enplanements, but less than

.05 percent of all annual enplanements.

General aviation airports

Large hub airports

Letter of Intent

Medium hub airports

Military airport program

National airport system

Noise projects

Nonhub airports
Glossary

Page 21 GAO-03-27 AIP Grant Funds

An obligation occurs when FAA makes an award to an airport sponsor,

thereby obligating FAA to fund a project under AIP.

Airports that have between 2,500 and 10,000 annual passenger

enplanements from scheduled commercial service.

Airports that have 10,000 or more annual passenger enplanements from

scheduled commercial service.

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.

The portion of discretionary funds set-aside designed to achieve specified

funding minimums established by Congress.

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.

Primary airports that have from .05 percent to .25 percent of all annual

enplanements.

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.

Obligation

Other commercial service

airports

Primary airports

Reliever airports

Set-aside funds

Small airport fund

Small hub airports

State block grant program
Glossary

Page 22 GAO-03-27 AIP Grant Funds

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.

Paved sections of an airport’s airfield that connect runways with aprons.

System planning

Taxiway

(540033)
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