FAA Airport Improvement Program (AIP): The Complete Guide for Airport Operators

The FAA's Airport Improvement Program (AIP) has been the backbone of airport infrastructure investment for over four decades. With $3.35 billion in base appropriations for FY2026 plus supplemental IIJA funding, AIP remains the largest federal grant program available to airport sponsors. Yet many airport operators leave money on the table by misunderstanding eligibility rules, federal share calculations, and strategic timing. This guide walks you through everything you need to know to maximize your airport's AIP funding.

Program Overview and Authorization

AIP was established under the Airport and Airway Development and Improvement Act of 1970 and is now governed by 49 U.S.C. §47104-47107. The program provides grants to public agencies that own and operate public-use airports. Its mission is straightforward: improve safety, capacity, and access at airports across the National Plan of Integrated Airport Systems (NPIAS).

Congress reauthorizes AIP through multi-year aviation bills. The most recent legislation—the Bipartisan Infrastructure Law (BIL), officially the Infrastructure Investment and Jobs Act (IIJA)—added $15 billion in new funding for Airport Infrastructure Grants (AIG) over five years while maintaining robust AIP base funding. Understanding these two programs in concert is critical: AIP is the traditional, demand-driven program; AIG is formula-based with separate deadlines and eligibility nuances.

FY2026 Funding Landscape

For FY2026, airport operators have access to:

AIP base appropriation: $3.35 billion (includes entitlements, discretionary, and set-asides)
AIG (Airport Infrastructure Grants): $2.89 billion available in FY2026 allocations
Supplemental IIJA funding: Additional resources through targeted programs (ATP, PIDP spillover)

The total federal airport grant pie exceeds $6 billion per year—a genuine but competitive resource. AIP remains the vehicle for most runway, taxiway, apron, and safety projects. AIG provides formula-based funding for the same eligible projects, with no competitive scoring. Understanding which program suits your project is the first strategic decision.

Eligible Sponsors

AIP is available only to public agencies that own and operate public-use airports. Eligible sponsors include:

Municipal governments and airport authorities
County and regional bodies
State aviation agencies
Tribal governments
Public institutions (universities with public-use airports)
Port authorities operating public-use airports

Not eligible: Private airport owners, private terminal operators (though they can be subrecipients), or airports not on the NPIAS. A small subset of non-NPIAS airports can receive AIP funding under the General Aviation Airport Program, but this requires special designation.

Many airport operators mistakenly assume their airport is automatically eligible. The FAA publishes the NPIAS annually—verify your airport's inclusion before investing staff time in an application.

Eligible Projects: What AIP Will Fund

AIP covers a broad range of airport infrastructure, but with critical exclusions that catch applicants off guard:

Eligible AIP Project Categories:

Runways, taxiways, aprons, and related airfield pavements
Runway safety areas and engineered materials arresting systems (EMAS)
Navigational aids and approach lighting
Airfield drainage and stormwater systems
Terminal ramps and fuel piers
Ground support equipment parking and storage facilities
Wildlife hazard mitigation
Planning and environmental studies
Safety improvements (aircraft rescue and firefighting facilities, emergency equipment)
Sustainable aviation fuel (SAF) infrastructure
Electrification of airport equipment and vehicles
Noise mitigation projects (when coupled with airfield improvements)

NOT Eligible for AIP:

Terminal buildings and interior renovations
Rental car facilities (off-airport or separate structures)
Hotel or office buildings
Parking structures (off-airport)
Passenger amenities and concourse improvements

This is where many applications stall. A common mistake: submitting a terminal expansion project to AIP when it should go to ATP (Airport Terminal Program) instead. If your project touches the terminal building, you likely need ATP or other funding, not AIP.

However, taxiway access to your terminal, landside roadway improvements directly supporting terminal operations, and utility infrastructure serving the terminal can qualify under AIP under the "terminal apron" or "landside support" categories if they are airport-owned and directly serve airfield operations.

Federal Share: Understanding the Cost Participation Rules

AIP uses a tiered federal share structure based on airport classification:

Airport Category	Federal Share	Local Match Required
General Aviation (non-primary)	90%	10%
Primary Commercial (primary)	80%	20%
Large/Medium Hub (large/medium primary)	75%	25%
Reliever airports (specific designation)	90%	10%

Key nuance: Federal share is determined by the airport's hub classification as of the fiscal year of the award, not the project classification. If your airport is a non-hub primary (such as a regional commercial airport serving 2,000-10,000 annual enplanements), you receive the primary share of 80% federal, 20% local match.

Many airport sponsors fail to budget adequately for local match. AIP funds cannot be used to cover local match—you must have matching funds from airport revenues, bonding, state grants, or other sources. This is a hard requirement and a common reason applications are deferred or withdrawn.

Match flexibility: You can sometimes leverage PFC (Passenger Facility Charge) revenue or state grants to cover your match. You can also use in-kind contributions (airport staff labor, volunteer work) up to a limit, though most airports find this impractical and prefer cash match from airport revenues.

Entitlement vs. Discretionary Funding

AIP is divided into two pools:

Entitlement Funding (Formula-Based):

Every airport in the NPIAS receives an entitlement allocation
Allocations based on airport activity (passengers, cargo, operations)
Entitlement funds do NOT expire (they roll forward indefinitely)
Less competitive; available to your airport as a matter of right
Typical entitlement for a medium hub: $15-$35 million over 5 years

Discretionary Funding (Competitive):

Remaining AIP funding after entitlements are set aside
Highly competitive; FAA scores and ranks applications
Competitive rounds focus on national priorities (safety, capacity, environmental)
Must submit formal application; no guarantee of funding
Typical discretionary project: $5-$20 million grant

Strategic implication: Use entitlement funding first. It's yours. Discretionary funding should be pursued for strategic projects that align with national priorities: safety improvements, capacity projects serving commercial service, climate resilience, or economic development impact.

The Application Process: Step-by-Step

Step 1: Environmental Documentation

Before any project can be funded, the FAA requires environmental review under the National Environmental Policy Act (NEPA). For most projects, this means:

Categorical Exclusion (CATEX): Simple projects (pavement maintenance, equipment replacement) require minimal documentation
Environmental Assessment (EA): Medium-impact projects; roughly 6-12 months
Environmental Impact Statement (EIS): Major projects (new runway, major expansion); 18-36+ months

Begin your environmental work early. Many projects get delayed not because AIP funding is scarce, but because environmental review wasn't initiated promptly.

Step 2: Airport Eligibility Confirmation

Verify your airport is on the NPIAS. Contact your FAA regional office (there are 9 regions) and confirm:

NPIAS eligibility
Hub classification (for federal share calculation)
Any historical funding constraints (prior defaults, regulatory violations)

Step 3: Project Definition

Define your project clearly:

Scope statement: What exactly will be built/improved?
Budget: Detailed line-item cost estimate (engage an engineer if needed)
Timeline: Start date, completion date
Federal share requested (do not overstate)

Step 4: Determine Funding Type

Will you use entitlement funding? (Recommended if available)
Will you apply for discretionary? (Submit through FAA Grant Portal)
Will you use AIG formula allocation? (Separate application process)

Step 5: Submit Grant Application

For Entitlement Funding:

No formal application required
Work directly with your FAA regional office
You may prequalify as many projects as your entitlement allows

For Discretionary Funding:

Submit through the FAA Grants Management System (FGMS)
Typical application window: January - March for competitive FY funding
Required documents: project justification, environmental clearance, cost estimate, financial feasibility, local match documentation, airport master plan excerpt

Step 6: FAA Review and Award

FAA scores discretionary applications against criteria (safety benefit, economic impact, environmental benefit, project readiness)
Award notifications typically released by June/July for FY appropriations
Grant agreement execution follows; funds flow via Letter of Intent (LOI)

Step 7: Closeout

File final drawdown request
Submit final project report (certifying completion to FAA standards)
Retain all records for 5 years (federal requirement under 2 CFR 200)

Key Deadlines for FY2026

May 1, 2026: Deadline for obligating FY2023 AIP entitlements (funds expire if not obligated)
June 30, 2026: AIP discretionary application window (typically closes)
September 30, 2026: Critical deadline for FY23 AIG funds (formula funds expire)
October 31, 2026: Expiration of BIL IIJA-specific funding windows (ATP, PIDP, etc.)

The May 1 and September 30 deadlines are hard stops. If you have unspent AIP or AIG allocations, your airport loses them. Many airport CFOs carry forward unobligated balances year after year; this deadline eliminates that carryover after a set period.

Common Mistakes to Avoid

Confusing AIP with ATP (Airport Terminal Program). AIP does not fund terminal buildings. ATP does. Know the difference before writing your application.
Underestimating local match requirements. A 75% federal project requires 25% local match. That match must come from airport revenues or other non-federal sources. Many applications are deferred when the local sponsor realizes they cannot provide match.
Submitting environmental documentation too late. NEPA clearance is a prerequisite for grant award. Begin environmental review 12+ months before you need the grant.
Overestimating project readiness. AIP discretionary applications are evaluated partly on "readiness to proceed." If your project is not in detailed design, your application will score lower.
Ignoring formula funding (AIG). Many airport operators focus only on discretionary AIP. AIG is formula-based and highly valuable—do not overlook it.
Failing to coordinate with state aviation agencies. Many states have their own airport grant programs. Stacking federal and state funding is permissible and often necessary to close the funding gap.

How AIP Interacts with PFC and AIG

PFC (Passenger Facility Charge):

Airport-collected, locally-controlled revenue
Can be used for AIP local match
Can be used for terminal projects (ATP)
Requires public comment period and FAA approval
Typical PFC: $4.50 per enplanement per trip

AIG (Airport Infrastructure Grants):

Formula-based (not competitive)
Available for same projects as AIP
Separate application and deadline (September 30, 2026 for FY23-26 combined expiration)
Should be combined with AIP entitlements strategically

Layering Strategy: A well-funded airport often layers funding: AIP entitlement + AIG formula + PFC local match + AIP discretionary. Example: A $100 million terminal renovation using ATP (terminal-only) might layer:

ATP grant: $50 million (50%)
PFC: $30 million (30%)
Airport bonds/reserves: $20 million (20%)

For airfield projects, a similar approach: AIP entitlement ($10M) + AIG allocation ($5M) + AIP discretionary grant ($5M) + local match ($5M) = $25M total project.

Strategic Timing and Planning

The best time to apply for AIP funding is when your project is:

Defined: You've completed a master plan study or feasibility analysis
Environmentally cleared: NEPA review is complete or underway
Engineered: Preliminary engineering is 30%+ complete
Matched: Local match is committed and secured
Aligned with national priorities: Your project addresses safety, capacity, sustainability, or economic impact

Most airport operators wait until they have a crisis (failing runway) before pursuing AIP. The better approach: anticipate your infrastructure needs 5-10 years out, coordinate with the FAA early, and submit applications strategically.

The FAA typically funds projects that are ready to go—those with strong environmental documentation, clear scope, and realistic budgets. Projects in early planning stages compete poorly in discretionary rounds.

Conclusion

AIP remains one of the most reliable funding sources for airport infrastructure in the United States. With $3.35 billion in annual base appropriations plus multi-billion-dollar IIJA supplements, the program has resources available. Success requires understanding eligible project types, federal share rules, application timelines, and strategic use of entitlements versus discretionary funding.

Airport operators who master AIP—and pair it with AIG, ATP, and PFC—can fund substantial infrastructure improvements without crushing their finances. Those who neglect the program, misunderstand eligible projects, or miss deadlines will fall behind in maintaining safe, efficient, and competitive airport facilities.

Start now: verify your airport's NPIAS status, confirm your entitlement allocation, and map your infrastructure needs to federal programs. The money is there—the question is whether you will access it.

This analysis was prepared with AI-assisted research by DWU Consulting. It is provided for informational purposes only and does not constitute legal, financial, or investment advice. All data should be independently verified before use in any official capacity.