Airport Improvement Program (AIP) Grants: Eligibility, Match, and Rules

Airport Improvement Program grants are federal awards the FAA makes to publicly owned airports for runway work, safety equipment, noise mitigation, land acquisition, and other capital projects. The money comes from the Airport and Airway Trust Fund and reaches airports two ways: as formula-based entitlements tied to passenger traffic, and as discretionary awards the FAA steers toward the projects it considers most valuable. Accepting a grant covers most of the project cost but binds the airport to a set of long-term operating obligations that outlast the construction itself.

Which Airports Qualify

Only airports listed in the National Plan of Integrated Airport Systems (NPIAS) can receive AIP money. The NPIAS covers public-use airports the federal government treats as significant to national air transportation — large commercial hubs, small regional fields, relievers that absorb overflow from busy airports, and general aviation facilities. An airport not on the list is not eligible, no matter how strong the project.

Within the NPIAS, an airport’s classification matters for how much funding it gets and on what terms. A primary airport is one with at least 10,000 annual passenger boardings. Everything else falls into nonprimary categories, including relievers and general aviation airports.

What the Money Can Pay For

The statute defines “airport development” broadly. Eligible work includes:

Runway, taxiway, and apron construction and rehabilitation, including runway extensions at nonhub airports.
Safety and rescue equipment such as firefighting vehicles, explosive detection devices, engineered materials arresting systems, and snow-removal equipment.
Navigation aids and airfield lighting, precision approach systems, windshear detection, and weather reporting.
Land or airspace acquisition needed for development or to remove hazards.
Noise compatibility measures, including soundproofing of nearby residences.
Planning work — master plans, field investigations, environmental studies.

Airport-owned hangars that increase revenue-producing ability also qualify at eligible airports, but only if used exclusively for aeronautical purposes. Interior items like bathrooms, plumbing, and heating are not covered.

What AIP Will Not Cover

Terminal work runs into tight limits. Routine maintenance — replacing carpet, painting, swapping ceiling tiles, patching small roof sections — is ineligible unless it’s folded into a larger eligible project. Airport administrative offices inside a terminal cannot be rebuilt with AIP dollars, even when demolition is required to make room for an eligible project. Tenant-owned improvements inside a sponsor-owned terminal follow the same rule: demolition is allowable, but rebuilding the tenant space is not.²

Parking garages are ineligible at every airport, full stop. Surface parking lots are ineligible at large, medium, and small hub airports. At smaller airports a surface lot can qualify only if it is non-revenue-producing, open to the public, and the airport meets all required safety and security equipment standards.³

How Much the FAA Pays

AIP does not cover full project cost. The federal share turns on airport size. Large and medium hub airports get 75 percent of allowable costs, leaving the sponsor with the remaining 25 percent. All other airports get a 90 percent federal share.⁴

For fiscal years 2025 and 2026, a temporary boost lifts the federal share to 95 percent at nonhub and nonprimary airports, cutting the local match from 10 percent to 5 percent.⁴

Where the Local Match Comes From

The non-federal share can be paid from state aviation grants, local appropriations, airport revenue, or qualifying in-kind contributions. The appraised value of land donated by an unrelated third party — or land the sponsor already owned — can offset the sponsor’s share. Donated labor, materials, equipment, and services can count only if the FAA approves the request and the valuation in advance, and the donor cannot be the sponsor. Only land value counts; acquisition-related costs like attorney fees, appraisals, and title searches cannot be credited toward the match.⁵

Formula Entitlements vs. Discretionary Grants

Congress authorizes a total AIP figure each fiscal year, and the FAA splits it into two pools.

Entitlement (Formula) Funds

Every primary airport gets a formula-based apportionment calculated on a sliding scale: $15.60 for each of the first 50,000 annual passenger boardings, $10.40 per boarding for the next 50,000, $5.20 for the next 400,000, $1.30 for the next 500,000, and $1.00 for every boarding above that. Annual apportionment per airport cannot fall below $1.3 million or exceed $22 million.⁶ Nonprimary and general aviation airports receive smaller shares through separate formulas. A sponsor can estimate the coming year’s entitlement from traffic numbers.

Discretionary Funds

Discretionary money goes where the FAA chooses. At least 75 percent of the discretionary pool each year must support capacity, safety, security, or noise compatibility work at primary and reliever airports. In deciding among applicants, the FAA weighs a project’s effect on national system capacity, its benefit-cost ratio, the sponsor’s financial commitment, state priorities, projected traffic growth, and the airport’s potential to draw global air cargo.⁷ Demand outstrips supply, so a discretionary application needs a real case.

State Block Grant States

In ten states, AIP funding for nonprimary airports flows through the state government rather than the FAA. Georgia, Illinois, Michigan, Missouri, New Hampshire, North Carolina, Pennsylvania, Tennessee, Texas, and Wisconsin participate. In those states, the state aviation office selects projects, issues grants, and oversees compliance at nonprimary commercial service, reliever, and general aviation airports. Federal law authorizes up to 20 states to participate.⁸ If your nonprimary airport sits in one of the ten, the state is your point of contact, not the FAA regional office.

Applying for a Grant

The FAA cannot approve a grant unless the project is consistent with local land-use plans, non-federal money exists to cover the local share, the sponsor has authority to carry the work out, and the project can be completed without unreasonable delay.⁹

Core documentation:

A current, FAA-approved Airport Layout Plan that reflects the proposed project.
Environmental clearance under the National Environmental Policy Act, often meaning an Environmental Assessment.
Standard federal forms — SF-424 (Application for Federal Assistance), SF-424C (budget detail), and SF-424D (construction assurances), all internally consistent with technical and environmental filings.
Detailed cost estimates for engineering, construction, and equipment at current market rates.

Any capacity project seeking more than $10 million in discretionary AIP funds must include a formal Benefit-Cost Analysis, and the FAA can request one for smaller capacity projects too.¹⁰ The analysis compares projected benefits, such as reduced delays, against total cost. For large hub airports pursuing a Letter of Intent, the BCA must also show system-wide capacity gains, not just local throughput.

Applications go through the Grants.gov portal.¹¹ Coordinating with the local FAA Airports District Office before submission is close to mandatory; the district office flags deficiencies early. The review timeline tracks the federal fiscal year, and many awards are announced during the summer. If the FAA approves, it issues a formal grant offer specifying the amount and scope. The sponsor must sign and return the offer within the stated timeframe. That signature legally binds the airport to every grant assurance and lets the sponsor start incurring reimbursable costs.

Letters of Intent for Phased Projects

An airport planning a multi-year project can request a Letter of Intent, which signals FAA commitment to fund future phases as appropriations allow. LOIs are limited to capacity-enhancing or capacity-preserving projects at primary and reliever airports. To qualify, the sponsor needs a BCA on file with the district office, an approved ALP (or a schedule showing approval by September 30), completed environmental decisions, and a financial template identifying every funding source across the project’s full lifecycle.¹² An LOI does not guarantee future funding, but it gives sponsors enough confidence to start design and land acquisition.

How the Sponsor Actually Gets Paid

AIP is a reimbursement program. The sponsor pays contractors, then requests repayment from the FAA through the Delphi eInvoicing system, typically monthly as work progresses. Each sponsor is assigned a risk level — nominal, moderate, or elevated — that governs how much backup must accompany each request. Nominal-risk sponsors submit a brief invoice summary and receive auto-approval up to 90 percent of the grant. Moderate and elevated-risk sponsors submit detailed invoices, contractor cover sheets, and signed verification statements, with every request reviewed manually.¹³

Procurement Rules That Apply to Every Contract

Federal money brings federal procurement rules that reach every contractor and subcontractor on the project.

Buy American

Steel and manufactured goods used on AIP projects must be produced in the United States. The FAA can waive the requirement if domestic products are not available in sufficient quantity or quality, if applying it would be inconsistent with the public interest, or if it would raise total project cost by more than 25 percent. A partial waiver is available when U.S.-made components account for more than 60 percent of a facility’s total component cost and final assembly occurs domestically.¹⁴

Wages and Labor Standards

Construction contracts and subcontracts above $2,000 must comply with the Davis-Bacon Act: laborers and mechanics receive at least the Department of Labor prevailing wage for the project’s location, contractors submit certified payrolls weekly, and wage determinations must be posted at the job site. Contracts above $100,000 also trigger the Contract Work Hours and Safety Standards Act, which requires time-and-a-half for hours over 40 in a workweek. The Copeland Anti-Kickback Act, effective at $2,000, prohibits pressuring workers to return any part of their wages.¹⁵

Disadvantaged Business Enterprise Program

A sponsor that expects to award more than $250,000 in FAA-funded prime contracts in a fiscal year must run a Disadvantaged Business Enterprise (DBE) program, setting participation goals for small businesses owned and controlled by socially and economically disadvantaged individuals.¹⁶

Long-Term Obligations After You Sign

A grant offer isn’t only money changing hands. The FAA conditions every AIP grant on written assurances under 49 U.S.C. § 47107 that govern airport operations long after construction ends.¹⁷

Airport Revenue Stays at the Airport

This is the assurance sponsors most often violate. All airport-generated revenue — landing fees, terminal rents, fuel flowage fees, concession income — must be spent on the capital or operating costs of the airport, the local airport system, or directly related air transportation facilities.¹⁸ A city that owns an airport cannot route terminal lease income into the general fund to pave downtown streets. Indirect diversions count too: excessive payments in lieu of taxes, below-market services the airport provides to the city, and payments to make other government bodies whole for lost tax revenue.¹⁹

Penalties reach beyond the airport. The FAA can withhold future apportionments and grants from both the airport and the municipality that owns it. If diverted funds are not reimbursed within 180 days of notification, the FAA can sue for double the diverted amount plus interest.¹⁹

Public Access and No Exclusive Rights

The airport must stay open to the public on fair and reasonable terms. No aeronautical service provider can hold an exclusive right to operate at the airport, with one narrow exception: where allowing more than one operator would be unreasonably costly or impractical, a single fixed-base operator arrangement is permitted.¹⁹

Pavement Maintenance Program

A sponsor that receives AIP funds for airfield pavement must implement a pavement maintenance management program. Detailed inspections of all runways, taxiways, and aprons are required at least annually, or every three years if a pavement condition index history exists. Drive-by inspections must happen monthly. Inspection records — dates, locations, distress types, maintenance performed — must be kept for at least five years and be retrievable on FAA request.²⁰ Letting pavement deteriorate puts future AIP pavement grants at risk.

Record Retention

Financial records, supporting documentation, and statistical records must be kept for at least three years after the final financial report for a grant is submitted. If litigation, an audit finding, or an unresolved claim is open when that window is about to close, records stay until the issue is fully resolved. Records for property and equipment acquired with federal funds run on a separate clock: three years after final disposition of the property, which for land or buildings can mean decades.²¹

1
Office of the Law Revision Counsel. 49 USC 47102 – Definitions
2
Federal Aviation Administration. AIP Handbook – Chapter 3 – What Projects Can Be Funded
3
Federal Aviation Administration. AIP Handbook – Appendix
4
Office of the Law Revision Counsel. 49 USC 47109 – United States Government Share of Project Costs
5
Federal Aviation Administration. AIP Handbook – Chapter 4
6
Office of the Law Revision Counsel. 49 USC 47114 – Apportionments
7
Office of the Law Revision Counsel. 49 USC 47115 – Discretionary Fund
8
Federal Aviation Administration. State Block Grant Program
9
Office of the Law Revision Counsel. 49 USC 47106 – Project Grant Application Approval
10
Federal Aviation Administration. Benefit-Cost Analysis for the Airport Improvement Program
11
Grants.gov. How to Apply for Grants
12
Federal Aviation Administration. AIP Handbook – Chapter 6
13
Federal Aviation Administration. Delphi eInvoicing External Training
14
Office of the Law Revision Counsel. 49 USC 50101 – Buy American
15
Federal Aviation Administration. Required Contract Provisions for Airport Improvement Program Projects
16
eCFR. 49 CFR Part 26 – Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs
17
Office of the Law Revision Counsel. 49 USC 47107 – Project Grant Application Approval Conditioned on Assurances About Airport Operations
18
Office of the Law Revision Counsel. 49 USC 47133 – Restriction on Use of Revenues
19
Office of the Law Revision Counsel. 49 USC 47107 – Project Grant Application Approval Conditioned on Assurances About Airport Operations
20
Federal Aviation Administration. Pavement Maintenance
21
eCFR. 2 CFR 200.334 – Record Retention Requirements