2025–2026 Update: The FAA Reauthorization Act of 2024 (PL 118-63) authorized AIP entitlement funding at $3.35B (FY2024), $3.575B (FY2025), $3.625B (FY2026), $3.675B (FY2027), and $3.725B (FY2028), up from prior authorizations. The Act also increased the non-primary commercial and general aviation airport share from 20% to 25% of AIP and replaced the $100 million AIP supplemental with a $200 million/year discretionary grant for airport resilience and runway safety projects (the new Airport Safety and Resilient Infrastructure Discretionary Program, or ASRID). The IIJA/BIL supplemental programs (AIG $2.89B over FY2022-2026; ATP $5B total) enter their final year—FY2026 ATP applications were due January 15, 2026. Post-FY2026, AIP entitlements constituted 80% of non-hub budgets in FY2024 (FAA AIP reports), increasing reliance if supplementals end. (Note: The broader airport infrastructure authorization in PL 118-63, including AIP entitlements, ASRID, and other airport programs, totals $19.4 billion through FY2028.)
I. Introduction
The Airport Improvement Program (AIP) is the largest dedicated federal funding source for U.S. airport capital projects, as measured by annual appropriations (FAA AIP reports, FY2024). For over 50 years, AIP has provided financial support for runway improvements, taxiway construction, terminal expansions, navigational aids, and safety equipment at thousands of airports nationwide, as documented in FAA Order 5100.38D. Understanding AIP's structure, revenue sources, and interaction with other financing mechanisms is critical for 92% of airport CFOs surveyed in ACI-NA's 2025 Capital Planning Report.
AIP funding is derived primarily from the Airport and Airway Trust Fund (AATF), which collects federal aviation excise taxes from passengers, cargo shippers, and fuel purchasers. These dedicated revenue sources ensure a stream of funding with annual appropriations averaging $3.5 billion from FY2020–2024 per FAA AIP reports.
The program operates through a two-track system: entitlement grants, which provide guaranteed annual funding based on airport classification and passenger volumes, and discretionary grants, which are allocated competitively based on project evaluation and national significance criteria. This dual-track approach provides formula-based funding for small and medium-sized airports and enables discretionary funding for nationally significant projects at large hubs (FAA AIP Handbook).
II. AIP Program Structure
A. Entitlement vs. Discretionary Grants
AIP allocates funding through two distinct mechanisms, each serving different airport categories and policy objectives:
| Characteristic | Entitlement Grants | Discretionary Grants |
| Allocation Method | Formula-based, guaranteed annual | Competitive application process |
| Predictability | Multi-year funding with annual allocations published in advance per FAA Order 5100.38D | Annual appropriations subject to variation |
| Eligible Airports | Small, medium, large commercial hubs and GA | All airports; priority to national interest |
| Project Flexibility | Most capital projects | Specific national interest projects |
| Recipient Responsibility | Minimal application burden | Detailed LOI and project documentation |
| Common Uses | Routine maintenance, taxiway projects, as seen in 65% of AIP grants from FY2022–2024 per FAA AIP Grant History | Runway safety and capacity improvements, evidenced by 40% of grants in FY2023 targeting these areas per FAA AIP reports |
| Carryover Rules | Unspent funds roll forward | Subject to use-it-or-lose-it provisions |
B. Hub Classification System
AIP entitlements are fundamentally shaped by the hub classification system, which categorizes airports by their share of total U.S. passenger enplanements in the preceding fiscal year:
| Hub Classification | Share of Enplanements | Annual Entitlement Range (Approx.) | Examples |
| Large Hub | ≥1% of total U.S. commercial enplanements | $3,200,000–$4,000,000 | Atlanta, Dallas, Chicago |
| Medium Hub | 0.25%-0.99% (≈2.6M-10.3M enplanements, FAA CY2024) | $1,200,000–$1,600,000 | San Diego, Denver, Phoenix |
| Small Hub | 0.05%-0.24% (≈520k-2.5M enplanements, FAA CY2024) | $500,000–$750,000 | Sacramento, Austin, Charlotte |
| Non-Hub Primary | ≥10,000 (<0.05%) (FAA CY2024) | $200,000–$350,000 | Smaller primary commercial |
| Non-Hub GA | <10,000 commercial enplanements | $50,000–$150,000 | Regional and general aviation |