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Federal airport infrastructure funding enters final year as needs outpace available dollars

Federal airport infrastructure funding enters final year as needs outpace available dollars

Built World
By Newzino Staff |

The last installment of a $15 billion program leaves airports facing a $174 billion backlog with no replacement in sight

February 5th, 2026: Congress Passes FAA Funding Bill

Overview

For five years, the largest airport-funding program in American history pumped roughly $3 billion a year into runways, terminals, and taxiways at more than 3,300 airports. That pipeline is now closing. In December 2025, the Federal Aviation Administration (FAA) released the fifth and final round of Airport Infrastructure Grant (AIG) formula allocations—$2.89 billion for fiscal year 2026—and opened the last competition for the Airport Terminal Program, worth approximately $1 billion. No successor program exists.

The wind-down matters because airport needs have grown far faster than the money. Airports Council International–North America estimates $173.9 billion in infrastructure work is needed over the next five years—roughly $30 billion a year—while combined federal airport funding from all sources totals about $12 billion annually. Of the $11.6 billion allocated in the first four years of the program, only $7.9 billion has been committed to specific projects, and a September 2025 inspector general audit found that unclear internal policies at the FAA increased the risk of unsupported costs. After 2026, airport operators will rely on the traditional Airport Improvement Program at $4 billion a year plus the Passenger Facility Charge, a per-ticket fee that Congress has not raised since 2000.

Key Indicators

$2.89B
FY2026 AIG Allocations
Final year of formula-based Airport Infrastructure Grant funding under the Infrastructure Investment and Jobs Act
$173.9B
5-Year Infrastructure Need
Total airport infrastructure spending required through 2029, per Airports Council International–North America
68%
AIG Obligation Rate
Share of FY2022–FY2025 AIG allocations committed to specific projects ($7.9 billion of $11.6 billion)
$4.50
PFC Cap (Since 2000)
Maximum Passenger Facility Charge per flight segment, unchanged for 25 years and worth roughly half its original value after inflation

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People Involved

Sean P. Duffy
Sean P. Duffy
United States Secretary of Transportation (Overseeing final year of IIJA airport disbursements)
Kevin M. Burke
Kevin M. Burke
President and CEO, Airports Council International–North America (Leading industry advocacy for continued airport infrastructure funding)

Organizations Involved

Federal Aviation Administration (FAA)
Federal Aviation Administration (FAA)
Federal Agency
Status: Administering final year of IIJA airport grant programs

The FAA oversees all civil aviation in the United States and administers the Airport Improvement Program and the IIJA airport grant programs that channel federal funds to more than 3,300 airports.

Airports Council International–North America
Airports Council International–North America
Industry Trade Association
Status: Advocating for post-IIJA airport funding

ACI-NA represents commercial airports in the United States and Canada and publishes the most widely cited estimates of airport infrastructure funding needs.

Department of Transportation Office of Inspector General
Department of Transportation Office of Inspector General
Federal Oversight Body
Status: Conducting ongoing audits of FAA's IIJA grant oversight

The DOT OIG audits how the Department of Transportation and its agencies, including the FAA, manage and spend federal funds.

Modern Skies Coalition
Modern Skies Coalition
Industry Advocacy Coalition
Status: Lobbying for next generation of aviation infrastructure funding

A coalition of more than 60 aviation trade groups, unions, and the U.S. Chamber of Commerce formed in May 2025 to advocate for over $30 billion in federal spending on air traffic control modernization and aviation infrastructure.

Timeline

  1. Congress Passes FAA Funding Bill

    Legislation

    Congress passed an FAA funding bill that included provisions to hire 2,500 new air traffic controllers and $4 billion to maintain and upgrade air traffic control infrastructure, backed by the Modern Skies Coalition.

  2. Final Airport Terminal Program Application Deadline Passes

    Deadline

    The deadline for FY2026 Airport Terminal Program applications closed, marking the last opportunity for airports to compete for IIJA terminal modernization grants.

  3. FAA Releases Final AIG Allocations and Last ATP Competition

    Funding

    The FAA released $2.89 billion in FY2026 AIG formula allocations—the program's last installment—and published the final Notice of Funding Opportunity for the Airport Terminal Program, closing applications on January 15, 2026. The agency confirmed no FY2026 AIG Funding Reallocation competition would take place because unobligated funds beyond the first $100 million reserved for contract towers were not available.

  4. Inspector General Flags FAA Grant Oversight Weaknesses

    Oversight

    The DOT Office of Inspector General reported that the FAA's IIJA oversight was 'hindered by unclear policies and internal control challenges,' with 97 percent of grant recipients classified as nominal risk despite documentation shortfalls.

  5. GAO Finds DOT Underreporting IIJA Spending Status

    Oversight

    The Government Accountability Office reported that the Department of Transportation had obligated 59 percent of its available IIJA funding but had not fully communicated funding status to Congress or assessed risks from awardee challenges including cost inflation.

  6. Modern Skies Coalition Launches

    Advocacy

    More than 60 aviation trade groups, unions, and the U.S. Chamber of Commerce formed the Modern Skies Coalition, advocating for over $30 billion in federal spending on air traffic control modernization and airport infrastructure.

  7. ACI-NA Updates Infrastructure Gap to $173.9 Billion

    Report

    ACI-NA's updated study found airport infrastructure needs had grown to $173.9 billion over five years, with annual needs of roughly $30 billion against roughly $12 billion in combined federal funding.

  8. FAA Reauthorization Act of 2024 Signed Into Law

    Legislation

    Congress reauthorized the FAA through fiscal year 2028, raising annual Airport Improvement Program funding from $3.35 billion to $4 billion—its highest level ever—but did not extend the IIJA airport programs or raise the Passenger Facility Charge cap.

  9. ACI-NA Reports $151 Billion Airport Infrastructure Need

    Report

    Airports Council International–North America published its infrastructure needs study, finding U.S. airports required $151 billion over five years—a 30 percent increase from the $115 billion estimated two years prior.

  10. FAA Distributes First AIG Formula Allocations

    Funding

    The FAA released the first year of Airport Infrastructure Grant formula allocations, beginning the five-year distribution cycle to more than 3,300 airports nationwide.

  11. Infrastructure Investment and Jobs Act Signed Into Law

    Legislation

    President Biden signed the $1.2 trillion infrastructure law, which included $15 billion for airport projects: $14.5 billion through the new Airport Infrastructure Grant formula program and $5 billion through the competitive Airport Terminal Program, each running for five years.

Scenarios

1

Congress Extends IIJA-Scale Airport Funding in Surface Transportation Reauthorization

Discussed by: Modern Skies Coalition, ACI-NA, and bipartisan infrastructure advocates in Congress

The 2026 surface transportation reauthorization bill or a standalone measure includes new multi-year airport infrastructure grants at or near IIJA levels. This would require Congress to authorize tens of billions in new general-fund spending at a time of deficit pressure. ACI-NA and the Modern Skies Coalition are actively lobbying for this, but opponents cite the national debt. The FAA Reauthorization Act of 2024 already raised baseline Airport Improvement Program funding to $4 billion annually, which proponents argue is insufficient and opponents argue is the appropriate federal commitment.

2

No New Airport Supplemental Funding; Airports Rely on AIP and PFCs Alone

Discussed by: Reason Foundation, Heritage Foundation, and fiscal conservatives in Congress

Congress does not pass additional airport infrastructure funding beyond the $4 billion annual Airport Improvement Program. Airports must finance improvements through the Passenger Facility Charge (still capped at $4.50), state and local revenue, and private financing. This outcome would leave a gap of roughly $18 billion per year between funding and documented needs, accelerating deferred maintenance at smaller airports. Analysts at the Reason Foundation have argued this approach is fiscally responsible but acknowledge it requires raising the PFC cap to give airports more self-financing capacity.

3

Congress Raises the Passenger Facility Charge Cap as a Partial Bridge

Discussed by: Bipartisan sponsors of the Rebuilding America's Airport Infrastructure Act, ACI-NA

Instead of another large federal grant program, Congress raises the per-ticket Passenger Facility Charge above its $4.50 cap, unchanged since 2000, allowing airports to self-finance a larger share of infrastructure work. Legislation has been introduced to increase the cap to $8.50 by 2026 with inflation indexing. This would disproportionately benefit larger airports with high passenger volumes, while smaller and rural airports that depend on federal formula grants would see less relief. Airlines have historically opposed PFC increases as a de facto ticket price hike.

4

Unobligated IIJA Funds Lapse or Get Redirected, Leaving Projects Unfinished

Discussed by: Government Accountability Office, DOT Inspector General

A significant portion of the $3.7 billion in unobligated AIG funds from the first four years fails to get committed before statutory deadlines, and unfinished projects stall. The GAO has already flagged that DOT is not fully assessing risks from awardee challenges including inflation-driven cost increases and permitting delays. If airports cannot obligate funds in time, the money flows into narrower programs like the Contract Tower grant or simply goes unspent, falling well short of the IIJA's original infrastructure goals.

Historical Context

American Recovery and Reinvestment Act Airport Grants (2009)

February 2009 – 2012

What Happened

In response to the Great Recession, Congress passed the $831 billion stimulus bill that included $1.1 billion in Airport Improvement Program grants with no local matching requirement. The FAA distributed funds through the existing AIP framework, financing more than 300 runway, taxiway, and air traffic control tower projects across the country.

Outcome

Short Term

Projects moved quickly because the FAA used existing grant infrastructure and waived the usual 5–25 percent local match, but the total—$1.1 billion—was a fraction of what the IIJA later provided.

Long Term

The ARRA grants demonstrated that large infusions of airport funding could be distributed through established federal channels, a model the IIJA's AIG program scaled up roughly thirteenfold.

Why It's Relevant Today

The IIJA airport programs followed the ARRA playbook of channeling supplemental federal money through the existing AIP framework. The question now is whether Congress will repeat the pattern again or let airports revert to pre-IIJA funding levels.

2013 Sequestration and FAA Tower Closures (2013)

March – May 2013

What Happened

Automatic budget cuts under the Budget Control Act of 2011 forced the FAA to cut $637 million, leading to the announced closure of 149 contract air traffic control towers at smaller airports. Transportation Secretary Ray LaHood and FAA Administrator Michael Huerta warned of furloughs and reduced services across the aviation system.

Outcome

Short Term

Air traffic controller furloughs caused delays at major airports for one week before Congress passed the Reducing Flight Delays Act, allowing the FAA to transfer $253 million from unspent airport funds to operations.

Long Term

The episode demonstrated that when federal airport funding shrinks abruptly, small and rural airports bear disproportionate consequences while political pressure concentrates on delays at large hubs.

Why It's Relevant Today

As IIJA supplemental funding expires, smaller airports that depend most heavily on federal formula grants face a similar dynamic: reduced federal support with no ready alternative revenue source.

Highway Trust Fund Revenue Shortfalls (2008–Present)

2008 – Present

What Happened

The federal Highway Trust Fund, which finances surface transportation and partly parallels the Airport and Airway Trust Fund structure, began running persistent shortfalls as fuel tax revenue stagnated while construction costs rose. Congress transferred over $275 billion from general revenues to keep the fund solvent rather than raising the gas tax, which has been frozen at 18.4 cents per gallon since 1993.

Outcome

Short Term

Each transfer averted a funding cliff, but the structural mismatch between dedicated revenue and spending needs persisted.

Long Term

The pattern of temporary fixes and periodic infusions set the political template for infrastructure funding: large supplemental packages like the IIJA rather than sustainable dedicated revenue reforms.

Why It's Relevant Today

The airport funding gap follows the same structural pattern: a dedicated trust fund (the Airport and Airway Trust Fund) and a user fee (the PFC) that have not kept pace with costs, filled by periodic congressional supplements that create boom-and-bust cycles.

15 Sources:
+9
Federal Aviation Administration Federal Register American Association of Airport Executives DOT Office of Inspector General Government Accountability Office Airports Council International–North America Modern Skies Coalition Aircraft Owners and Pilots Association Congressional Research Service Airports Council International–North America Federal Aviation Administration Federal Aviation Administration Federal Aviation Administration DOT Office of Inspector General Federal Aviation Administration