Beyond IIJA: Sustaining Airport Capital Investment After Federal Supplemental Funding Expires in FY2026

Executive Summary

The Infrastructure Investment and Jobs Act (IIJA), enacted in November 2021, authorized $25 billion in airport funding over five fiscal years (FY2022–FY2026), distributed across the Airport Infrastructure Grants (AIG, $14.5 billion), Airport Terminal Program (ATP, $5 billion), and FAA Facilities & Equipment ($5 billion). The fifth and final AIG allocation of $2.89 billion was released on October 27, 2025, completing the five-year cycle. However, the transition away from IIJA is already underway: FY2023 AIG allocations must be obligated by September 30, 2026; FY2024 funds expire September 30, 2027; FY2025 and FY2026 allocations expire September 30, 2029 and 2030, respectively.

Post-IIJA, the permanent federal baseline is the Airport Improvement Program (AIP) at $4.0 billion annually through FY2028 (increased from $3.35 billion under the FAA Reauthorization Act of 2024, P.L. 118-63). This creates a gap: airports had access to approximately $5.89 billion per year in combined AIG and AIP during IIJA; going forward, they will have $4.0 billion per year in AIP baseline—a reduction of approximately $1.89 billion annually in formula grant capacity. Over five-year periods, the reduction reaches $14.45 billion in available federal grant authority. Additional pressure includes the September 30, 2025 expiration of TIFIA airport eligibility and the frozen Passenger Facility Charge (PFC) cap at $4.50 per enplanement since 2000, which has lost approximately 39.6% of its purchasing power. The result is a structural shift from grant-dependent to debt-dependent capital funding and increased emphasis on alternative mechanisms (state/local grants, P3s, TIFIA loans for airports that secure permanent eligibility renewal, green bonds, and private equity).

For airport CFOs, bond counsel, and rating agencies, the IIJA sunset is a defined, quantifiable event. This article maps the funding cliff, identifies the instruments remaining post-FY2026, and examines how the funding gap flows through to Debt Service Coverage Ratio (DSCR), Cost per Enplanement (CPE), and airline rate negotiations for programs authorized in the next planning cycle.

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What IIJA Provided: Three Program Streams and Annual Distribution

The IIJA authorized $25 billion in airport funding over FY2022–FY2026, distributed across three distinct programs:

Airport Infrastructure Grants (AIG) — $14.5 Billion Total

AIG is a formula-based allocation distributed to all eligible airports according to enplanements, cargo, and other factors, similar to the traditional Airport Improvement Program. The program funded airside and landside infrastructure: runways, taxiways, aprons, air traffic control towers, roads, utilities, and safety equipment. The FAA released the fifth and final AIG allocation on October 27, 2025, completing the cycle. Annual AIG allocations: approximately $2.89 billion per year, resulting in $14.45 billion total allocated over FY2022–FY2025, with the fifth annual allocation released as noted. Of the $14.45 billion allocated FY2022–FY2025, approximately $7.9 billion had been committed to specific projects as of the FY2026 allocation announcement, leaving approximately $6.55 billion in prior-year allocations still in the pipeline but not yet fully obligated.

Airport Terminal Program (ATP) — $5 Billion Total

ATP is a competitive grant program dedicated to terminal facility improvements: gates, baggage handling, security checkpoints, concourses, and accessibility upgrades. Approximately $1 billion per year was allocated to competitive applicants. The program prioritized projects with national or regional impact, including projects exceeding $500 million capital costs at large hubs (e.g., JFK Terminal 6, LaGuardia Terminal B, Denver Concourse A, Atlanta Midfield Concourse) as well as smaller regional airport terminal and apron improvements.

FAA Facilities & Equipment — $5 Billion Total

This component funded modernization of the National Airspace System infrastructure owned and operated by the FAA: air traffic control tower replacements, navigation aid upgrades, radar system improvements, and critical FAA facilities. These investments benefit airports indirectly by enhancing air traffic service reliability.

Combined with the baseline Airport Improvement Program at $3.35 billion per year (prior to the 2024 reauthorization), total federal airport capital authority reached approximately $6.35 billion annually during IIJA (FY2022–FY2026). This represented a 90% increase over the pre-IIJA baseline of $3.35 billion per year (FAA Reauthorization Act of 2018).

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FY2026 is the Last Year of IIJA Airport Formula Funding, But the Transition is Already Underway

Obligation Windows and Expiration Deadlines

A critical constraint on airport planning is that AIG allocations do not expire at the end of the fiscal year in which they are made—they carry a four-year obligation window from the year of appropriation. The practical implication: the expiration cascade is staggered, not a single cliff on September 30, 2026.

Key deadlines for airports:

• May 1, 2026: Intent-to-use notice deadline for FY2023 AIG allocations
• June 30, 2026: Application deadline for FY2023 AIG allocations
• September 30, 2026: Obligation deadline for FY2023 AIG allocations (must be obligated under a signed grant agreement by this date)
• September 30, 2027: Obligation deadline for FY2024 AIG allocations
• September 30, 2029: Obligation deadline for FY2025 AIG allocations
• September 30, 2030: Obligation deadline for FY2026 AIG allocations (the final tranche)

For airports with multiple years of uncombined allocations, the ability to pool FY2023 through FY2026 funds into a single grant represents the last opportunity to assemble IIJA-era grant capacity at scale before the formula pipeline closes.

The transition away from IIJA is already underway for airports whose FY2023 allocations were not yet committed as of early 2026. Any airport that misses the September 30, 2026 obligation deadline for FY2023 funds forfeits that allocation—it cannot be carried forward or reallocated. This creates urgency in the first half of 2026 for airport capital planners.

Infrastructure Needs and the Adequacy of IIJA Funding

Even at peak IIJA funding levels, supplemental grants addressed only a fraction of total identified infrastructure needs. ACI-NA's 2025 Infrastructure Needs Study estimated that U.S. airports face $173.9 billion in infrastructure needs over the next five years—a figure that includes non-AIP-eligible projects and extends beyond the NPIAS's narrower AIP-eligible estimate of $67.5 billion. Over the five-year IIJA period (FY2022–FY2026), approximately $34.45 billion in combined AIG and AIP baseline was available. This means approximately $139.45 billion in identified needs remain unfunded or will require non-federal sources.

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The Post-IIJA Baseline: AIP at $4.0 Billion Per Year Through FY2028, But it Does Not Scale With Cost Trajectory

The FAA Reauthorization Act of 2024 and AIP Authorization Levels

The FAA Reauthorization Act of 2024 (P.L. 118-63), signed on May 16, 2024, increased AIP annual authorization from $3.35 billion (in place since FY2012) to $4.0 billion per year for FY2025 through FY2028. This is the first AIP baseline increase in over 12 years. The full five-year FAA reauthorization package totals $105.5 billion for FY2024–FY2028, including $66.7 billion for FAA operations, $17.8 billion for facilities and equipment, and $19.4 billion for airport infrastructure improvement grants.

However, the $4.0 billion baseline does not scale with documented infrastructure needs. The gap between the $4.0 billion annual AIP baseline and the IIJA-era rate of approximately $5.89 billion per year in combined AIG ($2.89B) plus the previous AIP baseline ($3.0B) is approximately $1.89 billion per year in grant capacity reduction. Expressed over five-year periods: airports will have access to approximately $20 billion in AIP grants post-IIJA (at $4.0 billion annually for FY2027–FY2031) versus approximately $34.45 billion in combined AIG plus AIP over the IIJA period—a reduction of $14.45 billion over comparable five-year spans. At enplanement levels of approximately 1.0 billion annually (FAA ACAIS data, illustrative estimate), this translates to reduced per-enplanement grant availability.

Reauthorization Risk and the 2026–2028 Congressional Calendar

AIP authorization through FY2028 means the program requires its own reauthorization in the next FAA reauthorization cycle, not expected before 2028–2029. The surface transportation reauthorization covering highway and transit programs also expires on September 30, 2026, creating a crowded congressional calendar for infrastructure funding legislation. Transportation policy analysts have identified at least five structural and political reasons why a full reauthorization replacing IIJA at comparable funding levels may not pass on schedule: legislative gridlock, competing priorities (EV infrastructure, rail, highways), fiscal constraints, political disagreement over PFC cap reform, and the shift from time-limited supplemental funding (IIJA) to permanent baseline authorization (which is politically harder to secure).

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TIFIA Airport Eligibility Expired September 30, 2025: A Low-Cost Debt Tool is Gone (For Now)

One of IIJA's most financially consequential airport provisions—expanded eligibility for Transportation Infrastructure Finance and Innovation Act (TIFIA) loans—expired on September 30, 2025. Under IIJA, airport sponsors could apply for TIFIA direct loans of up to 49% of total eligible project costs at Treasury-equivalent fixed interest rates, with maturities up to 35 years and flexible amortization. This represented a structural cost-of-capital advantage over tax-exempt revenue bonds for projects meeting TIFIA's investment-grade security requirements.

The Build America Bureau confirmed that airport project applications were accepted through September 30, 2025, and that no further applications are being processed for airport-specific TIFIA eligibility under the current statute. For airports with projects in early design that had assumed TIFIA debt in their funding plans, the lapse creates a gap that may need to be filled with higher-cost revenue bond debt, affecting DSCR and CPE projections in feasibility studies delivered to rating agencies.

H.R. 6168: The Airport TIFIA Financing Certainty Act

Representatives Jeff Hurd (R-CO) and John Garamendi (D-CA) introduced H.R. 6168, the Airport TIFIA Financing Certainty Act, on November 20, 2025, which would permanently restore and expand TIFIA eligibility for airports, raise the expedited-processing threshold to $100 million, and remove the investment-grade rating requirement for airport projects. As of March 2026, H.R. 6168 has not been enacted. ACI-NA's November 2025 statement supporting the bill cited the $173.9 billion five-year infrastructure need figure and characterized the TIFIA lapse as a loss of a financing option for capital-intensive airport projects. The bill faces airline industry pushback and remains stalled in committee.

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The Post-IIJA Capital Funding Equation Increases Bond-Financed Share and Importance of PFC Cap Reform

Grant-to-Bond Substitution and Debt Market Trends

With AIG formula funding concluding, TIFIA eligibility lapsed, and AIP constrained to $4.0 billion nationally through FY2028, the residual sources of airport capital are: AIP entitlement and discretionary grants, PFC collections, airport revenue bonds, state grants, airline capital contributions or rent prepayments, and alternative mechanisms (P3s, private equity, green bonds). The grant-to-bond substitution that IIJA had partially reversed is now reasserting itself structurally: as grants decline, bonds fill the gap, and bond debt service must be recovered through airline rates or non-aeronautical revenues.

Airport bond issuance has accelerated: approximately $18.2 billion issued through October 2024 (up 25% from 2023), and exceeding $10 billion in the first half of 2025 (up 51% from H1 2024). Much of this increase is airports front-loading debt issuance to lock in favorable rates and pre-fund projects that will no longer be eligible for IIJA grants post-2026.

The PFC Cap: Frozen at $4.50 Since 2000

The Passenger Facility Charge (PFC), capped at $4.50 per eligible enplaned passenger since 2000, is the instrument most directly in Congress's control that could change the funding equation. Adjusted for inflation using CPI-U, $4.50 in 2000 is equivalent to approximately $10.50 in March 2026 dollars (Bureau of Labor Statistics Inflation Calculator). ACI-NA and RAND estimates indicate the PFC cap has lost approximately 57% of its real purchasing power over 26 years since 2000—meaning airports collect $4.50 today on enplanements that would have cost $10.50 in current dollars to accommodate under comparable operating cost structures. The purchasing power erosion is driven by construction cost inflation (38.3% cumulative 2014–2024) significantly exceeding general CPI inflation (31.7% same period).

ACI-NA's 2025 Infrastructure Needs Study estimated that a cap increase to $12.00 per enplanement with annual indexing would be required to restore the PFC's intended role in airport capital financing. At current U.S. enplanement levels of approximately 1.0 billion annually (DWU analysis based on FAA ACAIS data through CY2024—illustrative estimate, not a surveyed figure), raising the cap to $12.00 from $4.50 could increase annual PFC collections from approximately $3.7–3.8 billion to approximately $9.8–10.0 billion, adding an estimated $6.0–6.3 billion in annual airport self-financing capacity nationally.

Political Status: Congress has declined to raise the PFC cap in multiple reauthorization cycles. The FAA Reauthorization Act of 2024 (P.L. 118-63) left the cap unchanged. Airlines for America (A4A) has consistently opposed increases, characterizing the PFC as a "tax on passengers" that raises ticket prices and suppresses demand. Legislative prospects for a PFC increase remain uncertain, though ACI-NA continues to advocate for reform.