FAA Reauthorization Act of 2024

A. Introduction

The FAA Reauthorization Act of 2024, enacted as Public Law 118-63 and signed on May 16, 2024, provides $105.5 billion in federal aviation funding through Fiscal Year 2028. This five-year authorization allocates $19.4 billion to airport infrastructure (AIP, ASRID, and related programs), $66.7 billion to FAA operations and research, and $17.8 billion to FAA facilities and improvements, as detailed in Title VII and related sections of Public Law 118-63.

For airport finance professionals, this reauthorization extends authority for key programs, as evidenced by the $105.5 billion in funding through FY2028 (Public Law 118-63). It extends the authority for the Airport Improvement Program (AIP) and the Airport and Airway Trust Fund collection authority, establishes reformed provisions for Passenger Facility Charges (PFCs), addresses airport cybersecurity and infrastructure resilience requirements, and introduces new funding mechanisms for airport safety and sustainability initiatives. This legislation affects airport capital planning, revenue forecasting, bond feasibility studies, and operational budgeting for the next four years through authorization of $19.4 billion for airport infrastructure grants (PL 118-63, Title VII).

B. Funding Authorization

B.1 Overall Funding Distribution

The total $105.5 billion authorization across FY2025–FY2028 breaks down as follows:

• Federal Aviation Administration operations and research: $66.7 billion

• FAA facilities, equipment, and improvements: $17.8 billion

• Airport infrastructure grants (AIP entitlements, ASRID, and other airport programs): $19.4 billion

• Research, engineering, and development: $1.6 billion

Note: The $19.4 billion airport authorization includes AIP entitlement grants ($16 billion for FY2025–FY2028 at $4 billion annually), the new ASRID discretionary program ($200 million annually), and other airport-specific initiatives. This distribution allocates $84.5 billion to FAA operations and airspace modernization and $19.4 billion to airport infrastructure development, per Public Law 118-63, reflecting a dual focus on system modernization and airport investment.

B.2 Airport Improvement Program (AIP) Provisions

Title VII of the reauthorization expands and refines the Airport Improvement Program by increasing entitlements to $4 billion annually for FY2025–FY2028 (up from $3.35 billion prior authorization) ($16 billion total through the authorization period):

• AIP entitlements: $4 billion annually for FY2025–FY2028, an increase from $3.35 billion (prior authorization).

• Expanded eligible projects: New categories of projects can compete for AIP funds, including airport safety and climate resilience infrastructure, multimodal ground transportation connections, and terminal modernization.

• Updated federal cost share: The act modifies federal participation rates for various project categories, recognizing capacity differences at large hub, medium hub, small hub, and non-hub airports.

• Small airport fund: Dedicated discretionary funding ensures rural and smaller airports maintain access to development capital.

• Letters of Intent (LOIs): Clarified multiyear commitment mechanisms allow airports to plan phased capital projects with greater financial certainty.

• AIP handbook update requirement: The FAA must issue an updated handbook clarifying eligible projects, cost-sharing methodologies, and environmental review procedures.

• Airport Safety and Resilient Infrastructure Discretionary Program (ASRID): A new discretionary program focused on airport safety enhancements and climate resilience projects.

B.3 Revenue Diversion Penalties

Section 703 of the reauthorization enhances penalties for violations of the revenue diversion prohibition (49 U.S.C. § 47107(b)). Airports pledging revenues—whether from PFC collections, landing fees, or other aviation revenues—to general fund uses face escalating civil penalties and potential loss of federal grants. This provision reinforces the integrity of airport financial covenants and bond documents.

C. Passenger Facility Charge (PFC) Provisions

C.1 PFC Turnback Reduction (Section 713)

One of the key changes for large and medium hub airports is the reduction of the PFC-AIP offset (often called "PFC turnback"):

Prior Rule: Under the PFC-AIP offset, airports imposing PFCs above $3.00 had their AIP formula entitlement apportionments reduced by 75%. This did not involve returning PFC collections; rather, it reduced AIP entitlement grants to offset higher PFC burdens on passengers.

New Rule (Sec 713): Section 713 of the FAA Reauthorization Act of 2024 (PL 118-63) reduced this AIP offset from 75% to 60%. Airports that impose PFCs above $3.00 now have their AIP entitlement apportionments reduced by only 60%, providing airports 15 percentage points more in combined PFC and AIP funding (reducing the offset from 75% to 60%), as calculated from the statutory change in Section 713.

Financial Impact: For a large hub airport with 50 million enplanements annually imposing a $4.50 PFC (the statutory maximum), this reduction improves combined PFC and AIP revenue. Based on DWU's analysis of historical AIP and PFC data from 2019–2024, this reduction could yield $20–60 million annually in additional combined funding, assuming stable passenger volumes and collection rates (DWU model, February 2026), depending on the airport's baseline AIP entitlement.

Interaction with AIP: Based on Public Law 118-63 and historical PFC data, incremental revenue may support capital programming, subject to airport-specific factors and applicable cost allocation rules, potentially reducing reliance on debt financing and affecting debt service coverage ratios.

C.2 PFC Cap—What Did Not Change

The statutory PFC cap remains at $4.50 per passenger enplanement. This proved contentious:

• According to ACI-NA's 2024 policy statements, airport industry groups advocated for elimination of the cap or inflation adjustment to approximately $7.00–$8.00 in 2024 dollars.

• Airlines, as represented by Airlines for America in their 2024 congressional testimony, opposed any increase, arguing that existing charges are sufficiently burdensome.

The unchanged cap has not been adjusted for inflation and represents reduced purchasing power. The $3.00 PFC cap was established in 1990 under the Aviation Safety and Capacity Expansion Act (PL 101-508). The $4.50 cap was established in 2000 by the AIR-21 legislation (PL 106-181). Since 2000, the $4.50 cap in 2000 dollars would be approximately $8.00 in 2024 dollars based on CPI-U inflation data from the U.S. Bureau of Labor Statistics. The failure to adjust for inflation effectively reduces the real authority available to airports, offsetting some gains from the turnback reduction.

C.3 PFC Regulation Update

The FAA issued a Notice of Proposed Rulemaking in September 2023 to update and clarify PFC regulations under 14 CFR Part 158. This rulemaking addresses:

• PFC use provisions and eligible project categories (per 49 U.S.C. § 40117(a)(3))

• Documentation and audit procedures for PFC accounts

• Streamlined approval procedures for routine PFC increases and projects

• Interaction between PFC revenues and other federal grants (AIP, ASRID)

The final rule is expected in 2025 and will supersede existing guidance, requiring finance teams to update rate-setting models, bond offering documents, and capital programming procedures in response.

D. Airport Infrastructure Provisions (Title VII)

D.1 Key Legislative Sections

• Section 702: Definitions of airport infrastructure, safety projects, and resilience initiatives

• Section 708: Updated federal cost share methodologies based on airport classification

• Section 709: Allowable costs and Letters of Intent framework

• Section 710: Small airport Letters of Intent provisions

• Section 714: ASRID program authorization and administration

• Section 716: Small airport fund discretionary allocation

• Section 733: Requirement for updated AIP handbook

D.2 Airport Safety and Resilient Infrastructure Discretionary Program (ASRID)

The ASRID program is a new discretionary funding stream within Title VII focusing on:

• Taxiway and runway safety enhancements (RSA improvements)

• Airport drainage and flood resilience projects

• Sustainable aviation fuel (SAF) production or blending infrastructure

• Electric or hydrogen aircraft charging/refueling infrastructure

• Cybersecurity and information technology hardening

ASRID grants are not entitlements; they are awarded competitively by the FAA on a fiscal year basis. Airports may evaluate incorporating ASRID opportunities into capital plans and may coordinate with state aviation offices on regional and statewide project priorities.

D.3 Environmental and Sustainability Provisions

The reauthorization emphasizes environmental compliance and sustainability:

• Airports must comply with the National Environmental Policy Act (NEPA) and state environmental review requirements as conditions of AIP and ASRID grants.

• Environmental Justice provisions require consultation with underserved communities near airports.

• Sustainability reporting by airports receiving federal grants includes carbon footprint, energy efficiency, and resilience metrics.

Finance teams may anticipate that future federal grant applications will require detailed sustainability and environmental impact data, and may consider establishing systems to track energy use, emissions, and climate adaptation efforts.