Airport Funding for Operations and Capital Improvements

Each airport is operated under a master plan, the primary purpose of which is to provide safe and efficient air carrier service and to enhance airport capacity. Capital improvements include construc­tion of new facilities or renovations of existing facilities. Sources of funding include:

• Airport Revenue Bonds

• The Airport Improvement Program (AIP)

• Airport user charges

• Passenger Facility Charges (PFCs)

• State and local funding programs

Airport Revenue Bonds

Bonds are the primary means of financing airport capital development projects. Bonds are debt instruments (like I. O.U. s) issued by the airport

owner to raise the money necessary for new construction or renovations. These bonds are tax-exempt and are known as General Airport Revenue Bonds (GARBs). Some GARBs have maturity dates of 30 years or more and since 1982 they have comprised more than 95 percent of all airport debt.

A secondary source of revenue is derived from bonds known as Special Facility Bonds. These bonds are secured directly by the owner of the facility, such as a fixed base operation or aircraft maintenance facility, and the owner of the facility is usually responsible for paying off the principal amount of the bond and all interest charges.