oversight

Airport Development Needs: Estimating Future Costs

Published by the Government Accountability Office on 1997-04-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to Congressional Committees
                 and the National Civil Aviation Review
                 Commission


April 1997
                 AIRPORT
                 DEVELOPMENT NEEDS
                 Estimating Future Costs




GAO/RCED-97-99
                       United States
GAO                    General Accounting Office
                       Washington, D.C. 20548

                       Resources, Community, and
                       Economic Development Division

                       B-275248

                       April 7, 1997

                       Congressional Committees and the
                       National Civil Aviation Review Commission

                       There has been an ongoing debate in recent years over the amount of
                       capital investment required at the nation’s airports. While no one disputes
                       that upholding the integrity of the nation’s airport system requires
                       continual capital investment, from repairing runways to constructing new
                       terminals, the estimates of how much this is likely to cost have varied
                       widely. In 1996, airport representatives estimated costs at $10 billion per
                       year, while airline representatives estimated costs at $4 billion per year.
                       The Federal Aviation Administration (FAA) estimated that airport capital
                       needs were roughly between the two other estimates, at $6.5 billion
                       annually.

                       As part of the FAA Reauthorization Act of 1996 (P.L. 104-264, section
                       274(e)), the Congress directed us to provide an independent assessment of
                       airport development needs to it and to the National Civil Aviation Review
                       Commission established by the same act. A clear understanding of these
                       capital development needs is an important step in agreeing on the future
                       funding levels for airport grants and on passenger facility charges. On the
                       basis of our discussions with the House and Senate aviation
                       subcommittees, we agreed to the following objectives for our review:

                   •   Compare the estimated capital development needs made by airport and
                       airline groups and FAA to determine why they differ.
                   •   Provide an up-to-date range of estimates of what airport capital
                       development needs are likely to be for the 5-year period from 1997 through
                       2001.
                   •   Identify the key factors that affect airport capital development needs and
                       determine how these factors are likely to affect such needs during the next
                       5 years.


                       The main reason for the differences in the airports’, the airlines’, and FAA’s
Results in Brief       estimates of airport capital needs is that they are based on widely
                       divergent views about which types of development projects and airports to
                       include in their estimates. In estimating annual needs of $10 billion, airport
                       representatives defined needs broadly to include all projects, whether they
                       are eligible for federal grants or not, at the more than 3,300 airports that
                       make up the national airport system. Conversely, in arriving at an estimate




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             of about $4 billion annually, the airlines defined needs more narrowly to
             include almost exclusively those projects eligible for federal grants at the
             421 largest commercial airports. FAA’s estimate of $6.5 billion annually was
             based only on those projects eligible for federal grants but at all airports in
             the national system.

             Using the most current and complete data—compiled from FAA, airports,
             state aviation agencies, and private sources—we developed four estimates
             ranging from $1.4 billion to $10.1 billion annually for the 5-year period
             from 1997 through 2001, depending on how needs are defined. We believe
             that providing a range of estimates for future airport capital needs is more
             useful than a single estimate because it provides various perspectives for
             policymakers to consider. The estimate of $1.4 billion per year is based on
             narrowly defining needs to include only projects eligible for federal grants
             to meet safety, security, and environmental needs as well as to maintain
             the existing infrastructure at the airports in the national system, but it
             does not include the bulk of other needs, such as projects to improve or
             expand airport infrastructure. The estimate of $10.1 billion per year is
             based on broadly defining needs to include all projects, regardless of
             priority or grant eligibility, at all airports that are, or are currently planned
             to become, eligible to receive federal or state support. Regardless of how
             needs are defined, estimates will not necessarily correspond to how much
             airports will ultimately spend on capital development because of
             limitations in estimating future needs and projected costs, unanticipated
             needs, complexities in decision-making, and funding constraints.

             Several key factors influence airport capital development needs, most
             notably growth in aviation activity and meeting FAA-recommended design
             standards (such as runway length) to achieve full productivity for the
             aircraft already using the airport. These two factors account for two-thirds
             of the estimated $30.6 billion in projects eligible for federal grants over the
             next 5 years at airports in the national system. Three other factors—the
             reconstruction of existing infrastructure that is beyond its useful life,
             upgrades to the existing infrastructure to prepare the airport facilities to
             accommodate the introduction of different aircraft, and addressing safety,
             security, and environmental concerns—account for the remaining
             one-third of planned capital development projects.


             Understanding the differences between the capital needs estimates
Background   requires some knowledge about the various types of U.S. airports, FAA’s
             system for tracking airport capital development needs and providing



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                            federal grants, and other sources of capital funding used by airports. The
                            sections that follow present an overview of these topics.


The Multitiered System of   The United States accounts for approximately 40 percent of all
U.S. Airports               commercial aviation activity and 50 percent of all general aviation activity
                            in the world. As of March 1997, there were 18,224 public and private
                            airports in the United States, from large commercial airports, such as
                            Chicago O’Hare International Airport that handles more than 30 million
                            passenger enplanements per year, to small, privately owned grass landing
                            strips in rural areas that may serve only a few aircraft each year.

                            Of the 18,224 airports, FAA considers 3,331 to be part of a national system
                            providing an extensive network of air transportation to every part of the
                            country. This national system, called the National Plan for Integrated
                            Airport Systems (NPIAS), is depicted in figure 1 and is based on FAA’s 1996
                            data. The airports that are part of NPIAS are categorized into two main
                            groups: commercial service and general aviation. FAA further divides
                            commercial service airports into primary and other commercial service
                            airports. The 421 airports that FAA considered primary airports in fiscal
                            year 1996 are divided into various classes of hubs (see fig. 1), depending
                            on the number of annual passenger enplanements at each airport. Nearly
                            all commercial passenger enplanements in the United States occur at the
                            primary airports. FAA designates some general aviation airports as reliever
                            airports to reduce congestion at the commercial service airports.




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Figure 1: Categories of U.S. Airports




                                        National Airport System (NPIAS)                               Other airports
                                                 3,331 airports                                    approximately 15,000
                                        Designated by FAA, these airports                    Outside the national system are many
                                        provide an extensive network of air                 landing strips and smaller airports, most
                                     transportation to all parts of the country.               with fewer than 10 based aircraft.




                         Commercial service airports                                    General aviation airports
                                    564                                                          2,767
              These airports handle all regularly scheduled commercial                  These airports have at least 10
               airline traffic and have at least 2,500 annual passenger                based aircraft, but no scheduled
                      enplanements (boardings by passengers).                          commercial passenger service.




              Primary airports                         Other commercial service
                    421                                        airports
        These airports have over 10,000                          143
              annual passenger                         These airports have 10,000 or
                enplanements.                            fewer annual passenger
                                                             enplanements.




             Large hubs (29): at least 1 percent of all annual enplanements



              Medium hubs (40): between .25 percent and 1 percent of all annual enplanements



             Small hubs (71): from .05 percent to .25 percent of all annual enplanements



             Nonhubs (281): over 10,000 annual enplanements, but less than .05 percent of all annual enplanements




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FAA’s Role in Funding   The airports included in the NPIAS are eligible for federal Airport
Airport Capital         Improvement Program (AIP) grants. These grants are awarded by FAA and
Development Needs       funded through the Airport and Airway Trust Fund that is financed by
                        taxes on domestic airline tickets, international air travel from the United
                        States, domestic cargo transported by air, and noncommercial aviation
                        fuel. During fiscal year 1996, FAA awarded about $1.375 billion in AIP
                        grants.1

                        FAA relies on airports, through their planning process, to identify individual
                        projects for funding consideration. A federal statute and FAA’s rules
                        establish which types of airport development projects are eligible for AIP
                        funding.2 Generally, most types of airfield improvements, such as runways,
                        lighting, navigational aids, and land acquisition, are eligible, while hangars
                        and interest expense on airport debt are not. AIP-eligible projects for
                        airport areas serving travelers and the general public—called “landside
                        development”—include entrance roadways, pedestrian walkways and
                        movers, and space within terminal buildings that does not produce
                        revenue and is used by the public, such as waiting areas. AIP-ineligible
                        landside development projects include revenue-producing terminal areas,
                        such as ticket counters and concessions, and the interest on construction
                        bonds. Because the estimated cost of eligible airport projects greatly
                        exceeds the available grant funding, FAA uses a priority system based on
                        airport and project type to ration the available funds.

                        FAA maintains a substantial database to support its airport planning and
                        funding efforts. The NPIAS database includes individual airport projects
                        from approved airport master plans, system plans, and discussions with
                        airport officials.3 It shows these needs for up to 10 years in the future.
                        However, because the legislative mandate to compile the NPIAS only
                        requires that it contain AIP-eligible projects, and because the NPIAS is FAA’s
                        source for identifying the projects eligible for grant funding, the NPIAS
                        contains relatively few of the capital needs projects that are not eligible for


                        1
                         There are two categories of AIP grant funds—apportionment and discretionary. Apportionment funds
                        are distributed by formula to commercial service airports and states. Discretionary funds can generally
                        be used for any eligible airport. All airports receiving AIP grants must provide a “matching share,”
                        ranging from 10 percent to 25 percent of a project’s total cost, depending on the type of project and
                        size of the airport.
                        2
                         These development projects are listed in the AIP Handbook (Order 5100.38A). Projects to plan
                        development are also eligible for AIP funding.
                        3
                         Airport master plans identify the development needed at individual airports on the basis of forecasts
                        of aviation activity and the consideration of environmental impacts, community compatibility, and
                        financial feasibility. Airport system plans identify the aviation facilities required for the needs of a
                        state, region, or metropolitan area.



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                        AIPgrants. Thus, while the database is substantial, it does not reflect the
                        total development needs at airports.


Role of Other Funding   AIP grants are only part of the funding picture for airport capital
Sources                 development needs. Another source of funding for some airports are
                        passenger facility charges (PFC). In 1990, the Congress authorized
                        commercial service airports to charge each passenger a $1, $2, or $3
                        facility charge per trip segment up to a maximum of four charges per
                        round trip. These airports must apply to the FAA for approval to levy a PFC.
                        Generally, PFC collections can only be spent on AIP-eligible projects, with
                        three exceptions: Airports can use PFC funds for interest on airport bonds,
                        for terminal gates and related areas, and for noise mitigation projects that
                        are not part of an FAA-approved noise program. In 1996, 238 airports
                        collected over $1.1 billion in PFCs.

                        Collectively, U.S. airports also fund billions of dollars of capital projects
                        each year from other funding sources. Projects that are not eligible for AIP
                        grants or PFCs, such as parking facilities or access for local transportation,
                        must be financed in some other way. Other sources of funding include
                        grants from state and local governments, tax-exempt bonds, or revenues
                        generated by the airport. Airports generate revenues from four general
                        sources: landing fees and rentals from terminal leases (both paid by
                        airlines), concessions (such as parking), and other income (such as
                        advertising). Finally, airlines and other tenants have also privately
                        financed the construction of their terminals, hangars, and other facilities.


                        The wide variance in the estimates of capital development needs provided
Differences in          by the airports, the airlines, and FAA is mainly the result of the differences
Estimates Stem          in the types of projects and airports they include. The estimate prepared
Mainly From Which       by airports defined needs the most broadly of the three to include all
                        projects, regardless of whether they were eligible for AIP grants or not. The
Types of Projects and   airports’ estimate also included all airports in the national system. By
Airports Are Included   contrast, the airlines’ estimate is based almost exclusively on AIP-eligible
                        projects and is limited to the primary airports, which numbered 421 at that
                        time. FAA’s estimate covers all airports in the national system, but only for
                        AIP-eligible projects. The three groups also differed somewhat in the
                        databases they used, the manner in which they treated inflation, and other
                        factors. Figure 2 compares the three estimates in these various respects.




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Figure 2: Comparison of Three Estimates of Airport Capital Development Needs


                                      Estimate made by               Estimate made by                Estimate made by
                                      airports                       airlines                        FAA

   How large is the total
                                      $60 billion                    $19.8 billion                   $32.7 billion
   estimated need?


   What period does the
   estimate cover?                    1997 through 2002              1996 through 2000               1996 through 2000



   What is the average                $10 billion                    $4 billion                      $6.5 billion
   annual amount?



   How many airports                  The over 3,300 existing        The 421 largest                 The over 3,300 existing
   were included?                     airports in FAA's national     commercial service              airports in FAA's national
                                      airport system                 airports                        airport system




   What types of projects             All projects, whether          Almost exclusively those        Only those projects eligible
   were included?                     eligible for federal Airport   projects eligible for federal   for federal Airport
                                      Improvement Program            Airport Improvement             Improvement Program
                                      grants or not                  Program grants                  grants




                                      Industry associations          Industry association used a     1996 National Plan for
   What information was               developed estimates for        private database (Airport       Integrated Airport Systems
   used to develop the                140 hub airports through a     Marketing Information
   estimate?                          survey and estimates for       System) based on FAA's
                                      the remaining airports         1994 National Plan for
                                      using data from FAA's          Integrated Airport Systems
                                      1996 National Plan for
                                      Integrated Airport Systems




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Airports’ Estimate   The airports’ estimate was prepared by two industry associations, the
                     Airports Council International—North America (ACI), which represents
                     many commercial service airports in the United States and Canada, and
                     the American Association of Airport Executives (AAAE), which represents
                     airport managers. In arriving at its estimate of $60 billion over 6 years,
                     ACI/AAAE relied mainly on a survey of 140 large, medium, and small hub
                     airports in the United States, supplemented by FAA’s data for smaller U.S.
                     airports.4 ACI/AAAE asked its airport members for an estimate of their
                     capital needs, including those projects not eligible for AIP funding.
                     Eighty-eight airports responded, and ACI/AAAE extrapolated the results to
                     all 140 hub airports existing at the time.5 For information on all of the
                     other 3,000 plus airports in the national airport system, ACI/AAAE used FAA’s
                     NPIAS database for fiscal year 1996. ACI/AAAE also adjusted its estimate to
                     reflect future inflation of 3 percent per year.6

                     As part of our analysis of each estimate, we attempted to replicate the
                     calculations to determine if they had been accurately made. Using
                     ACI/AAAE’s data and strictly adhering to its method of analysis, we
                     calculated total needs of $55.9 billion over 6 years, $4.1 billion less than
                     ACI/AAAE reported. The $4.1 billion includes $3.1 billion in estimated needs
                     and $1 billion in inflation adjustment. Most of the difference resulted from
                     the way AIP-eligible and -ineligible projects were calculated and the cost
                     figures attributed to the FAA for nonhub primary airports and general
                     aviation airports. We discussed these differences with the ACI and AAAE
                     officials responsible for their estimate, who concurred with our
                     conclusion.


Airlines’ Estimate   The airlines’ estimate was prepared by the Air Transport Association of
                     America (ATA), the industry association that represents major U.S. airlines.
                     ATA used a commercial database that blends NPIAS with some airport and
                     state development plans. ATA’s annualized estimate of airport capital
                     development needs was less than half of ACI/AAAE’s estimate—$4 billion


                     4
                      ACI/AAAE initially provided this estimate in testimony before the House Committee on
                     Transportation and Infrastructure, Subcommittee on Aviation, on March 13, 1996.
                     5
                      Using information from the 88 airports that responded to the survey, ACI/AAAE extrapolated the
                     needs of all 140 hub airports by using the ratio of the responding airports’ passenger enplanements to
                     total passenger enplanements at hub airports. ACI/AAAE also subtracted some airport projects after
                     the survey was completed on the basis of their judgments about the likelihood that some projects
                     would be undertaken.
                     6
                      Airports estimated their future development needs in 1996 dollars. ACI/AAAE then totaled these for
                     each year and converted the total to current, inflation-adjusted dollars using a 3-percent rate of
                     inflation.



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                     versus $10 billion.7 Five major factors account for the $6 billion annual
                     difference between ATA’s and ACI/AAAE’s estimates:

                 •   ATA included only the 421 primary airports. ATA’s justification for doing so
                     was that these airports accounted for more than 99 percent of all
                     commercial passenger enplanements. ATA’s inclusion of only primary
                     airports led ACI/AAAE’s estimate to be about $1.35 billion greater than ATA’s.
                 •   ATA included only a few projects that did not qualify for AIP funding at the
                     421 primary airports. This led ACI/AAAE’s estimate to be about $3.4 billion
                     greater than ATA’s.
                 •   ATA used a database that had older information. ATA’s database, which it
                     purchased from a private vendor, was based mainly on the data compiled
                     in 1994 for the NPIAS, whereas the ACI/AAAE estimate used data compiled in
                     1996. This led ACI/AAAE’s estimate to be about $1.3 billion greater than
                     ATA’s.8
                 •   ATA did not explicitly adjust its estimates for inflation.9 ACI/AAAE’s use of a
                     3-percent inflation factor across the much broader range of airports and
                     projects led its estimate to be about $1 billion greater than ATA’s.
                 •   The sum of all other differences, including the differences in the number
                     and valuation of individual projects at the same airports, led ACI/AAAE’s
                     estimate to be about $1 billion less than ATA’s estimate.

                     We were able to replicate ATA’s estimate exactly.10


FAA’s Estimate       FAA’s April 1996 estimate placed airport capital development needs at an
                     annualized amount of about $6.53 billion—over $2.5 billion larger than
                     ATA’s and about $3.5 billion smaller than ACI/AAAE’s. FAA’s annual estimate
                     was larger than ATA’s for three main reasons:


                     7
                      ATA initially provided this estimate in testimony before the House Committee on Appropriations,
                     Subcommittee on Transportation and Related Agencies, on March 20, 1996.
                     8
                      We based this estimated difference on a comparison of the 1994 and 1996 NPIAS databases. The 1996
                     NPIAS shows planned 5-year development costs that are about $6.5 billion more than the 1994 NPIAS
                     shows for the same time period, 1996 through 2000. This occurred because neither FAA’s NPIAS
                     database nor ATA’s AMIS database includes many projects beyond a 5-year time frame.
                     9
                      According to the airport consultants we interviewed, most but not all of the master plans and capital
                     improvement plans that feed into the AMIS and NPIAS databases provide project costs in constant,
                     non-inflation-adjusted dollars.
                     10
                       In March 1997, ATA updated this estimate to $6 billion annually for the 5 years from 1997 through
                     2001. Unlike the previous estimate of about $4 billion annually, this estimate included all NPIAS
                     airports and was based on an updated AMIS database. The updated AMIS database was compiled using
                     FAA’s 1996 NPIAS and airports’ capital improvement plans. However, the revision came too late in our
                     work for us to analyze it in detail.



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                        •   Unlike ATA, which included only the 421 primary airports in its estimate,
                            FAA included all 3,331 airports that are part of the national airport system.
                            Including all national system airports led FAA’s estimate to be about
                            $1.35 billion greater than ATA’s.
                        •   FAA based its estimate on its 1996 NPIAS information, while ATA used 1994
                            information. This led FAA’s estimate to be about $1.3 billion greater than
                            ATA’s.
                        •   The sum of all other differences, such as ATA’s inclusion of a small number
                            of AIP-ineligible projects, led FAA’s estimate to be about $70 million less
                            than ATA’s and accounted for the remaining difference between the two
                            estimates.11

                            Four main reasons explain why FAA’s annual estimate was about
                            $3.5 billion smaller than ACI/AAAE’s:

                        •   FAA excluded all AIP-ineligible projects, while ACI/AAAE included them. This
                            led ACI/AAAE’s estimate to be about $3.4 billion greater than FAA’s estimate.
                        •   We found ACI/AAAE’s estimate to be overstated, which led it to be about
                            $500 million (before inflation adjustment) greater than FAA’s.
                        •   FAA did not explicitly adjust its estimates for inflation like ACI/AAAE did. Not
                            adjusting for inflation accounts for ACI/AAAE’s estimate being about
                            $1 billion greater than FAA’s.
                        •   The sum of all other differences between FAA’s and ACI/AAAE’s estimates,
                            including the differences in the time period covered and the number and
                            valuation of individual projects, account for the remainder of the
                            difference. In sum, these differences led ACI/AAAE’s estimate to be about
                            $1.4 billion less than FAA’s.

                            We were able to replicate FAA’s 5-year estimate to within about $8 million
                            (or 0.02 percent). The difference we found is attributable to slightly
                            different versions of the NPIAS. (A more detailed reconciliation of the three
                            estimates appears in table I.5 in app. I.)


Comparison of Like          If the analysis is narrowed to those projects and airports that are common
Airports and Projects       to all three estimates, the differences among the estimates decrease. Table
Further Clarifies the       1 shows that when comparing the same projects (AIP-eligible projects at
                            primary airports), the estimates range from about $4 billion to $5.2 billion
Disparity Between           per year, a $1.2 billion, or 31 percent, difference. This result supports our
Estimates                   contention that the main reason for the differences among the three

                            11
                             The sum of these three differences does not exactly equal the difference between FAA’s and ATA’s
                            annual estimates because of rounding.



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                                       estimates is the treatment of projects ineligible for AIP grants and the
                                       scope of airports included. This result also highlights other factors
                                       contributing to the differences in estimates, such as FAA’s reliance on more
                                       current data and differences in source data and methods. (Table I.4 in app.
                                       I provides a more extensive comparison of the three estimates on the basis
                                       of the types of projects and airports each estimate considered.)

Table 1: Comparison of Estimates for
AIP-Eligible Projects at Primary       Dollars in millions
Airports                                                                                                Annual average
                                       Primary airport            Number of
                                       category               airports (1996)           ACI/AAAE                    ATA                 FAA
                                       Large hub                             29              $2,600              $2,256               $2,930
                                       Medium hub                            40                 900                  705               1,021
                                       Small hub                             71                 400                  584                 637
                                       Nonhub                              281                  550                  420                 599
                                                                                                    a
                                       Total                               421               $4,450              $3,965               $5,187
                                       a
                                        This figure represents ACI/AAAE’s reported estimate. GAO’s recalculated total based on
                                       ACI/AAAE’s data is $4,153 million.



                                       The valuation of the individual projects within each database also
                                       accounts for some of the difference in the three estimates. Quantifying the
                                       overall magnitude of this difference among the estimates would be nearly
                                       impossible because there are some 45,000 airport projects in the NPIAS
                                       database and because there is no unique project identifier by which to
                                       compare the same projects among the databases. However, to provide
                                       some indication of whether the same project was valued equally in all
                                       three estimates, we selectively compared the same projects at a large,
                                       medium, and small hub airport.12 As table 2 shows, the three estimates
                                       contained different valuations for the same projects. Differing cost
                                       estimates for the same projects are likely the result of varying time periods
                                       and sources for the data.




                                       12
                                         We did not compare other categories of airports, such as general aviation, because ATA did not
                                       include other categories of airports and ACI/AAAE did not survey these airports, instead relying on
                                       FAA’s estimates.



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Table 2: Comparison of Individual
Project Valuations at Selected      Dollars in millions
Airports, AIP-Eligible Portion                       Hub                       ACI/AAAE’s         ATA’s        FAA’s
                                    Airport          size     Project             estimate      estimate     estimate
                                    John F.          Large    International         $537.6        $555.7       $512.4
                                    Kennedy                   Arrivals
                                    International             Building
                                    Reno/Tahoe       Medium   Noise                   11.7          14.5          12.5
                                    International             mitigation
                                    Billings Logan Small      All projects            13.3          19.5          25.6
                                    International
                                    Total                                           $562.6        $589.7       $550.5



                                    The capital development needs for the nation’s airports over the 5-year
Future Airport Capital              period from 1997 through 2001 will vary according to how narrowly or
Development Needs                   broadly needs are defined. A narrow definition yields a much lower
Depend on the Scope                 estimate than one that includes all airports and projects. However,
                                    regardless of how needs are defined, none of these estimates may
of Projects and                     represent how much airports will actually spend on capital development
Airports Considered                 during this period because of data limitations, unanticipated needs, airline
                                    and community influence, and funding constraints.


Airport Capital                     To provide an up-to-date range of estimates for airport capital
Development Needs Vary              development needs for the period from 1997 through 2001, we applied
Considerably Over the               ever-widening criteria of needs to the most current data we could obtain.
                                    Using FAA’s preliminary 1997 NPIAS database supplemented by ACI/AAAE and
Next 5 Years, Depending             state aviation data, we determined a range of estimates from $1.4 billion
Upon How Needs Are                  annually to $10.1 billion annually over the 5-year period, depending on
Defined                             what types of airports and projects are included. A range of estimates,
                                    rather than a single estimate, provides various perspectives on airport
                                    needs for policymakers to consider. Table 3 shows the four estimates we
                                    developed on the basis of varying criteria, which are discussed below.




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Table 3: Range of Airport Capital
Needs, 1997 Through 2001            Dollars in millions
                                    Scope of projects and airports                      Number of               Total, 1997        Annual
                                    included in the estimates                       airports (1997)           through 2001        average
                                    All AIP-eligible projects to maintain                      1,846                  $7,069        $1,414
                                    current infrastructure and meet
                                    safety, security, and environmental
                                    needs at existing NPIAS airports,
                                    but not address capacity or other
                                    needs
                                    All AIP-eligible projects to meet                          2,084                 $13,873        $2,775
                                    high-priority needs at existing
                                    NPIAS airportsa
                                    All AIP-eligible projects to meet                          3,331                 $30,550        $6,110
                                    needs at existing NPIAS airports
                                    All AIP-eligible and most                                  4,664                 $50,646       $10,129
                                    AIP-ineligible projects at existing
                                    and proposed NPIAS airports and
                                    existing state system airports
                                    a
                                      We defined high-priority projects as those receiving a score of less than 140.2, the average
                                    priority score computed under FAA’s Airport Capital Improvement Plan (ACIP) process for each
                                    project in FAA’s preliminary 1997 NPIAS database. Under FAA’s ACIP process, limited grant
                                    funds are ranked according to a formula that assigns point values to projects on the basis of the
                                    type of airport and type of project. The lower the point value, the higher the priority of a project.
                                    For example, a runway safety project at a large hub airport would score fewer points, and
                                    accordingly have a higher priority, than a terminal upgrade at a smaller airport. The FAA uses the
                                    ACIP process as a guide, but not the sole criteria, for awarding discretionary grants.



                                    AIP-eligibleprojects to meet safety, security, and environmental needs, as
                                    well as maintain the existing infrastructure of airports, total $1.4 billion
                                    per year. This amount would include $161 million per year for safety and
                                    security projects, many of which are for federally mandated programs;13
                                    $422 million per year for environmental projects, mostly for noise
                                    compatibility programs;14 and $831 million per year for reconstruction
                                    projects to maintain the existing airport infrastructure. However, this
                                    estimate does not include the bulk of airports’ other needs, such as
                                    projects that would improve existing infrastructure or add additional
                                    infrastructure to meet future demands. The next highest estimate of about
                                    $2.8 billion per year includes all projects with an Airport Capital
                                    Improvement Plan (ACIP) score of less than 140.2, the average score of all
                                    the projects contained in FAA’s preliminary 1997 NPIAS database. This
                                    estimate, therefore, reflects the projects that FAA considers to be of a

                                    13
                                      The regulations for safety and security programs may be found at title 14, sections 139 and 107,
                                    respectively, Code of Federal Regulations.
                                    14
                                     The regulations for noise compatibility programs may be found at title 14, section 150, Code of
                                    Federal Regulations. Noise compatibility programs are not mandated but are voluntary.



                                    Page 13                                              GAO/RCED-97-99 Airport Development Needs
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                              higher priority—which in addition to meeting all AIP-eligible safety,
                              security, environmental, and reconstruction needs, covers a portion of
                              airports’ other needs. For example, at this level, almost 30 percent of
                              airports’ AIP-eligible planned capacity needs would be met.

                              Including all AIP-eligible projects at existing national system airports yields
                              an estimate of $6.1 billion annually. In the scope of projects and airports
                              included, this estimate is comparable to FAA’s earlier estimate of $6.5
                              billion for 1996 through 2000, and in its size, it approximates ATA’s recently
                              revised annual estimate of $6 billion for 1997 through 2001. The fourth and
                              most inclusive estimate of $10.1 billion annually includes all projects,
                              whether eligible for AIP or not, and all existing and proposed NPIAS airports
                              and existing state-funded airports. Including AIP-ineligible projects at NPIAS
                              airports accounts for $3.7 billion of the $4 billion annual difference
                              between this estimate and the next highest estimate.15 The remaining
                              difference stems from adding airports proposed for inclusion into the NPIAS
                              and non-NPIAS state-funded airport needs. Although the federal government
                              is not responsible for funding AIP-ineligible projects or state airports, we
                              included them in our range of estimates because ineligible projects
                              compete with eligible projects for airport financing and NPIAS airports
                              compete with non-NPIAS airports for limited state funds.


Majority of Planned Capital   The nation’s 29 large hub airports account for a significant share of the
Development Needs Is at       planned capital development for the period from 1997 through 2001.
the Largest Airports          Specifically, these airports account for 28 to 52 percent of total planned
                              capital needs across the four estimates we developed. General aviation
                              airports, including reliever airports, varied between 15 and 22 percent of
                              total needs, depending upon the estimate. Table 4 shows the planned
                              capital development by type of airport for the four estimates.




                              15
                                The majority of AIP-ineligible projects were based on ACI/AAAE’s earlier survey of hub airports and
                              our reconstructed estimate of AIP-ineligible needs discussed earlier. However, another $392 million of
                              AIP-ineligible projects for nonhub, other commercial service, and general aviation airports were drawn
                              from FAA’s preliminary 1997 NPIAS database.



                              Page 14                                             GAO/RCED-97-99 Airport Development Needs
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Table 4: Planned Development by Type of Airport Under Various Capital Needs Estimates, 1997 Through 2001
Dollars in millions; Percentage of total by type of airport in parentheses.
                                                                                      Type of airport
                                                                                                                                              Total,
                                                                                               Other                                           1997
Scope of projects and airports                 Large          Small     Medium             commercial           General          State      through
included in the estimates                        hub           hub         hub       Nonhub   service           aviation       funded          2001
All AIP-eligible projects to maintain       $2,002           $1,320        $901       $1,022          $261        $1,564            N/Aa      $7,069
current infrastucture and meet safety,         (28)             (19)        (13)         (15)           (4)          (22)
security, and environmental needs at
existing NPIAS airports, but not
address capacity or other needs
All AIP-eligible projects to meet           $5,305           $2,954      $1,115       $1,524          $366        $2,068            N/A     $13,873
high-priority needs at existing NPIAS          (38)             (21)         (8)         (11)           (3)          (19)
airportsb
All AIP-eligible projects to meet needs    $13,543           $4,547      $2,795       $2,841          $728        $6,096            N/A     $30,550
at existing NPIAS airports                     (44)             (15)         (9)          (9)           (2)          (20)
All AIP-eligible and most AIP-ineligible   $26,153           $9,258      $3,783       $2,946          $729        $7,329          $447      $50,646
projects at existing and proposed              (52)             (18)         (8)          (6)           (1)          (15)           (1)
NPIAS airports and existing state
system airports
                                                Note: Percentages may not sum to total because of rounding.
                                                a
                                                    N/A means not applicable.
                                                b
                                                 We defined high-priority projects as those receiving a score of less than 140.2 under FAA’s ACIP
                                                process.




Estimates Are Subject to                        While our estimates of capital needs, as well as previous estimates, are
Certain Limitations                             useful indicators of future development activity, it is important to
                                                recognize that the actual level and types of development that ultimately
                                                result may be different for several reasons:

                                           •    Limitations on the accuracy of the data collected. According to FAA
                                                planners and consultants, the accuracy of airport master plans and system
                                                plans diminishes significantly beyond 3 to 5 years into the future. Two
                                                studies have shown that final project costs may be about one-third higher
                                                than original planned costs,16 partly because of the difficulty in predicting
                                                future growth in aviation activity and actual project costs and outcomes.
                                                For example, according to ACI, AAAE, and Airport Consultants Council (ACC)

                                                16
                                                  These are Richard de Neufville, Airport System Planning: A Critical Look at the Methods and
                                                Experience (M.I.T. Press and MacMillan, 1976); and Edward W. Merrow, Understanding the Outcomes
                                                of Megaprojects, A Quantitative Analysis of Very Large Civilian Projects (RAND, Mar. 1988). According
                                                to Richard de Neufville and some airport consultants, final project costs continue to be about one-third
                                                higher than original planned costs.



                                                Page 15                                             GAO/RCED-97-99 Airport Development Needs
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    officials,17 development costs may be understated because master plans
    and system plans are preliminary estimates and are not based on detailed
    design and engineering plans, which provide more precise cost estimates.
•   Unanticipated needs. Airports must also adjust their capital spending to
    respond to federal or local mandates and to changes in the market. For
    example, following an accident in 1990, in which two aircraft collided on
    the ground, FAA imposed new requirements for runway and taxiway signs
    that airports had not previously planned for. Similarly, if some of the
    White House Commission on Aviation Safety and Security’s
    recommendations for improved airport security are implemented,
    unforeseen security-related costs may occur.18
•   Complexities of the decision-making process. While airport master plans
    and system plans may represent airports’ estimates of future development,
    that does not necessarily mean that airlines or local communities concur.
    For example, some airport development has been prevented on the basis
    of input from airlines and communities about airline competition,
    development costs, and environmental issues, including noise.
•   Availability of funding. Even if the demand for projects were fully
    anticipated, accurately measured, and not opposed, they still may not be
    financially feasible. Constraints on funding sources, whether they be
    legislatively imposed, such as AIP and PFCs, or imposed by market forces,
    such as airport bonds, will vary among airports and projects and may
    mean that not all projects can be funded. For example, in a prior GAO
    report, we determined that the large and medium hub airports rely less on
    AIP funds than do smaller airports, but AIP remains an important funding
    source, representing almost one-fourth and one-third, respectively, of their
    total capital funds.19 Our analysis also showed that as the total number of
    passengers at an airport decreases, the airport’s reliance on AIP funds
    increases. Similarly, a 1996 FAA study found that small hub airports rely on
    AIP funds more than large or medium hub airports.20


    We were not able to compare the various estimates of capital needs to
    actual levels of historical spending because no reliable data on airports’
    capital spending currently exist. We found no data that track airport

    17
      ACC represents consulting firms that specialize in serving the airport industry.
    18
      Among the recommendations of the Commission are federally mandated security systems, including
    explosives-detection system machines; improved training; and passenger identification. At this time,
    FAA has not determined the total costs to implement the Commission’s recommendations, although it
    is expected to be several billion dollars. Also, it is unknown how the costs may be funded. Final Report
    to President Clinton, White House Commission on Aviation Safety and Security (Feb. 12, 1997).
    19
      AIP Funding for the Nation’s Largest Airports (GAO/RCED-96-219R, July 31, 1996).
    20
      Innovative Approaches for Using Federal Funds to Finance Airport Development (Mar. 1996).



    Page 16                                               GAO/RCED-97-99 Airport Development Needs
                         B-275248




                         capital expenditures in the aggregate. While FAA tracks which projects
                         receive AIP funds, it does not track airports’ entire capital programs or the
                         relationship of these programs to previously stated needs in the NPIAS.
                         Furthermore, we found no data that track projects that do not receive
                         federal funding. AAAE estimated that airports’ total capital spending was
                         about $10 billion in 1992. However, double counting of capital and
                         operating expenditures and limited coverage of all airports means this
                         estimate is not fully reliable as a gauge of capital spending. In a more
                         recent study, Coopers & Lybrand L.L.P. estimated that airport
                         expenditures increased from $4.5 billion to $6.9 billion between 1993 and
                         1996, averaging $5.92 billion annually.21 However, this estimate is based on
                         aggregate funding from airport bonds, AIP, PFCs, and states, rather than
                         actual expenditures; also, it does not include funding from local
                         government or airport operating income directed to capital spending.


                         Five key factors are reflected in FAA’s preliminary 1997 NPIAS database as
Several Factors Affect   influencing airport capital development needs eligible for AIP funding. In
Airport Capital          the NPIAS database, projects are classified according to their main purpose,
Development Needs        and in descending order for dollar volume of projects, these key factors
                         are (1) growth in the demand for aviation services, (2) bringing an airport
                         up to FAA-recommended design standards to achieve full productivity of
                         aircraft using the airport, (3) the reconstruction of aging airport
                         infrastructure, (4) upgrades to infrastructure to accommodate the
                         introduction of different aircraft, and (5) safety, security, and
                         environmental concerns. Together, as figure 3 depicts, the first two factors
                         represent two-thirds of airports’ planned development costs in FAA’s
                         preliminary 1997 NPIAS database. The reconstruction of aging
                         infrastructure (such as restoring airfield pavements), upgrading intended
                         to allow an airport to accommodate different aircraft (such as larger or
                         heavier aircraft), and projects to address safety, security, and
                         environmental concerns (including aircraft noise) make up the remaining
                         one-third. Development needs included in the preliminary 1997 NPIAS to
                         address these factors total about $30.6 billion over the 5-year period from
                         1997 through 2001.




                         21
                           Federal Aviation Administration: Independent Financial Assessment (Feb. 28, 1997). This study was
                         required by the Federal Aviation Reauthorization Act of 1996 (P.L. 104-264, section 274).



                         Page 17                                            GAO/RCED-97-99 Airport Development Needs
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Figure 3: Factors Contributing to
AIP-Eligible Airport Needs, 1997                                                           10.2%
Through 2001                                                                               Introduction of different aircraft

                                                                                           9.5%
                                                                                           Safety, security, and
                                                                                           environmental concerns


                                                     •


                                               •
                                                                   34.7% •                 Growth in demand for aviation
                                                                                           services
                                         13.6%
                                            •



                                                     32.0%
                                                        •


                                                                                           Meeting FAA-recommended
                                                                                           design standards

                                                                                           Aging infrastructure




                                    Source: Preliminary 1997 NPIAS database.




Anticipated Growth                  Projects intended to expand an airport’s capacity are the largest single
Generates Projects for              category of AIP-eligible needs in FAA’s preliminary 1997 NPIAS database.
New Capacity                        About $10.6 billion, or 34.7 percent, of FAA-projected capital development
                                    costs are for projects to expand an airport’s capacity beyond its current
                                    design. Most of these projects are to expand airfield capacity and terminal
                                    buildings. According to FAA, the main objective of enhancing capacity is to
                                    reduce congestion resulting from flight delays. In 1994, FAA designated 23
                                    airports as the most congested, and by 2004, FAA expects that number to
                                    rise to 29 if additional capacity is not added.22 However, ACI, AAAE, and ACC
                                    officials noted that FAA’s designation of most congested airports does not

                                    22
                                     FAA designates airports as the most congested airports if they exceed 20,000 hours of annual flight
                                    delays.



                                    Page 18                                             GAO/RCED-97-99 Airport Development Needs
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include capacity limitations in terminals and other landside areas, such as
entrance roadways. Some landside and terminal area development
projects are not eligible for AIP funding.

The eventual effect on congestion and delays of completing
capacity-related projects is not clear. All the current and the expected
most congested airports are large or medium hub airports, and 82 percent,
or $8.6 billion, of the total dollar spending planned for capacity-related
projects is directed to those airports. However, even if additional capacity
is added, it may not significantly reduce delays. According to FAA,
three-quarters of all delays are caused by weather, while traffic volume
accounts for delays only 19 percent of the time.23

The demand for passenger and cargo service at commercial airports is
expected to continue to grow over the next decade, stretching airports’
current capacity. At commercial airports, passenger enplanements have
increased by an average of about 4 percent annually since 1990, and FAA
estimates that this pace will continue through 2008. Domestic cargo
activity, which is concentrated at busy commercial service airports, is
expected to grow at 6 percent per year for the next decade, according to
The Boeing Company’s 1996/1997 World Air Cargo Forecast. In contrast to
commercial airports, activity at general aviation airports has declined
since 1990, but FAA expects about a 1-percent annual growth rate through
2008.

To examine whether the forecasted growth in aviation activity influences
airport capacity projects, we performed a regression analysis relating
capacity needs to the forecasted growth in aviation activity. We found a
positive and statistically significant relationship between forecasted
activity growth, measured either as aircraft operations (take-offs and
landings) or passenger enplanements, and the dollar value of
capacity-related projects in the NPIAS.24 This relationship among the 69
large and medium hub airports, and among all 421 primary airports, is
statistically significant, but there are differences in magnitude. For all 421
primary airports, the dollar value of capacity-related projects in the NPIAS is
considerably more sensitive to changes in the forecasted level of
passenger enplanements than to changes in the forecasted level of aircraft



23
 1995 Aviation Capacity Enhancement Plan, U.S. Department of Transportation and Federal Aviation
Administration (Dec. 31, 1996).
24
  A more complete discussion of the regression analysis’s methodology and results is presented in app.
II.



Page 19                                             GAO/RCED-97-99 Airport Development Needs
                         B-275248




                         operations;25 we expect this is because, on average, smaller airports have
                         greater excess capacity on their airfield. Examining just the 69 large and
                         medium hub airports, we found that the dollar value of planned capacity
                         projects is equally sensitive to changes in enplanements and operations.26


Maximizing Airport       Projects intended to bring existing airports up to FAA-recommended design
Capabilities Generates   standards, on the basis of the current use of the airport, are the second
Projects to Meet         largest category of AIP-eligible needs reported in FAA’s preliminary 1997
                         NPIAS database. About $9.8 billion, or 32 percent, of FAA’s projected capital
Recommended Design       development costs for airports are for these types of projects. For
Standards                example, at an airport now serving aircraft that are larger and faster than
                         what the airport was originally designed for, aircraft fuel or passenger
                         loads must be limited, causing them to operate below their full operational
                         capabilities. FAA has guidance on airport design, such as runway
                         specifications for serving various types of aircraft. Nearly three-quarters of
                         the money in this category is intended for projects that would improve
                         runways and taxiways, expand terminals, and purchase land so that the
                         aircraft using the airport could operate more productively.


Aging Infrastructure     The reconstruction of aging airport infrastructure is the third largest
Generates Projects for   category of AIP-eligible needs. About $4.15 billion, or 13.6 percent, of FAA’s
Reconstruction           projected airport capital development costs is for the reconstruction of
                         existing infrastructure that has deteriorated due to weather or use and has
                         reached the end of its useful life. Typical projects include the
                         rehabilitation of airfield pavements or the replacement of airfield lighting
                         systems.

                         Ninety-one percent of all planned reconstruction costs are for projects to
                         repair airfield pavements. The rehabilitation of airfield pavements,
                         according to FAA, is generally done on a 15- to 20-year cycle. According to

                         25
                           For the 421 primary airports, we estimate that a 1-percent increase in forecasted enplanements is
                         associated with nearly a 0.75-percent increase in projected spending for capacity-related projects,
                         while a 1-percent increase in forecasted aircraft operations is associated with an increase in projected
                         spending for capacity-related projects only about half that large. Technically, this percentage change,
                         or elasticity, applies only for airports that have values of forecasted growth in enplanements or
                         operations and dollar values of capacity-related projects that are close to the mean values of those
                         measures for all airports included in the regression. In dollar terms, each additional operation is
                         associated with about $1,000 in additional planned capacity spending, while each additional passenger
                         is associated with about $50 in additional planned capacity spending.
                         26
                          For the 69 large and medium hub airports, we found a 1-percent increase in either enplanements or
                         operations is associated with slightly more than a 0.5-percent increase in projected spending for
                         capacity-related projects. In dollar terms, each additional operation is associated with about $1,500 in
                         additional planned capacity spending, while each additional passenger is associated with about $40 in
                         additional planned capacity spending.


                         Page 20                                              GAO/RCED-97-99 Airport Development Needs
                         B-275248




                         FAA, failure to replace deteriorating pavement increases an airport’s
                         maintenance costs, limits aircraft operating loads, and can result, for
                         example, in potholes that can damage aircraft landing gear. According to
                         airport officials and consultants, the reconstruction of aging infrastructure
                         will continue to be a significant capital development cost.


The Introduction of      The estimated cost of upgrading existing facilities to accommodate the
Different Aircraft       introduction of different types of aircraft not yet using the airport is the
Generates Projects to    fourth largest factor affecting AIP-eligible needs. About $3.1 billion, or
                         10.2 percent, of FAA’s projected airport capital development costs is for
Upgrade Facilities       upgrading existing facilities. In contrast to design standards, which
                         address current deficiencies, upgrades are intended to provide for changes
                         anticipated in the future. Such changes include, for example, aircraft that
                         are being developed or existing aircraft not currently serving an airport.
                         Typical projects include increasing the length of runways and
                         strengthening runways and taxiways so that airports will be able to
                         accommodate in the future aircraft that the airports cannot now serve.
                         Nearly half of the costs for planned upgrades is for runways, while just
                         over one-third is for access roads. If airlines and manufacturers eventually
                         introduce larger aircraft with heavier payloads and wider wingspans,
                         airports may be faced with considerably greater upgrade costs.


Safety, Security, and    Projects intended to address safety, security, and environmental needs are
Environmental Concerns   among FAA’s top funding priorities and account for $2.9 billion, or 9.5
Have Generated Special   percent, of total AIP-eligible needs. Of this total, about $807 million, or
                         2.6 percent, of FAA’s projected capital development costs are for safety and
Programs                 security projects, including projects for federally-mandated safety and
                         security programs. Safety and security projects, which have FAA’s highest
                         AIP funding priority, include purchasing fire and rescue equipment and
                         installing security checkpoints. The costs of implementing the
                         recommendations of the White House Commission on Aviation Safety and
                         Security, which were issued on February 12, 1997, are not reflected in
                         these estimates because projects to implement the recommendations have
                         yet to be developed.

                         In addition, $2.1 billion, or 6.9 percent, of total planned costs for
                         development needs is for environmental protection, mainly aircraft noise
                         mitigation projects. These projects include, for example, the acquisition of
                         noise-impacted land and the soundproofing of residences and public
                         buildings in the areas underlying aircraft approach and departure routes.



                         Page 21                                GAO/RCED-97-99 Airport Development Needs
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                  Unlike safety and security programs, noise compatibility programs are
                  voluntary.


                  We provided the Department of Transportation, FAA, ACI, AAAE, ATA, and ACC
Agency Comments   with a copy of our draft report for review and comment. Agency and
                  association officials, including FAA’s Deputy Associate Administrator for
                  Airports; ACI’s President; AAAE’s Senior Vice President, Federal Affairs;
                  ATA’s Managing Director, Airports; and the Chairman of ACC’s
                  Governmental Affairs Committee, generally agreed with the facts
                  presented and provided some clarifying comments and information, which
                  we included in the report as appropriate. Agency and association officials
                  also stated that the report was a thorough and balanced representation of
                  the facts.


                  We performed our review from December 1996 through March 1997 in
                  accordance with generally accepted government auditing standards.
                  Additional details on our scope and methodology are contained in
                  appendix III.

                  We are sending copies of this report to other interested congressional
                  committees; the Secretary of Transportation; the Administrator, Federal
                  Aviation Administration; and the Director, Office of Management and
                  Budget. Copies will be made available to other interested parties on
                  request.

                  Please call me at (202) 512-2834 if you or your staff have any questions
                  about this report. Major contributors to this report are listed in appendix
                  IV.




                  John H. Anderson Jr.
                  Director, Transportation Issues




                  Page 22                                GAO/RCED-97-99 Airport Development Needs
B-275248




List of Recipients

The Honorable John McCain
Chairman
The Honorable Ernest F. Hollings
Ranking Minority Member
Committee on Commerce, Science,
  and Transportation
United States Senate

The Honorable Slade Gorton
Chairman
The Honorable Wendell H. Ford
Ranking Minority Member
Subcommittee on Aviation
Committee on Commerce, Science,
  and Transportation
United States Senate

The Honorable Bud Shuster
Chairman
The Honorable James L. Oberstar
Ranking Democratic Member
Committee on Transportation
  and Infrastructure
House of Representatives

The Honorable John J. Duncan, Jr.
Chairman
The Honorable William O. Lipinski
Ranking Democratic Member
Subcommittee on Aviation
Committee on Transportation
  and Infrastructure
House of Representatives

The Honorable Norman Y. Mineta
Chairman, National Civil Aviation Review Commission




Page 23                             GAO/RCED-97-99 Airport Development Needs
Contents



Letter                                                                                             1


Appendix I                                                                                        26

Calculation,
Comparison, and
Reconciliation of the
Estimates of Airport
Capital Development
Needs
Appendix II                                                                                       33

Regression Model and
Results
Appendix III                                                                                      36

Scope and
Methodology
Appendix IV                                                                                       38

Major Contributors to
This Report
Tables                  Table 1: Comparison of Estimates for AIP-Eligible Projects at             11
                          Primary Airports
                        Table 2: Comparison of Individual Project Valuations at Selected          12
                          Airports, AIP-Eligible Portion
                        Table 3: Range of Airport Capital Needs, 1997 Through 2001                13
                        Table 4: Planned Development by Type of Airport Under Various             15
                          Capital Needs Estimates, 1997 Through 2001
                        Table I.1: ACI/AAAE’s Estimate and GAO’s Recalculation of                 27
                          Airport Capital Development Needs, 1997 Through 2002
                        Table I.2: ATA’s Estimate of Airport Capital Development Needs,           28
                          1996 Through 2000
                        Table I.3: FAA’s Estimate of Airport Capital Development Needs,           29
                          1996 Through 2000




                        Page 24                              GAO/RCED-97-99 Airport Development Needs
          Contents




          Table I.4: Comparison of Estimated Capital Needs Reported by               30
            ACI/AAAE, ATA, and FAA
          Table I.5: Reconciliation of the 1996 Estimates of Total Airport           31
            Capital Development Needs
          Table II.1 Regression Coefficients and Summary Statistics                  35

Figures   Figure 1: Categories of U.S. Airports                                       4
          Figure 2: Comparison of Three Estimates of Airport Capital                  7
            Development Needs
          Figure 3: Factors Contributing to AIP-Eligible Airport Needs,              18
            1997 Through 2001




          Abbreviations

          AAAE       American Association of Airport Executives
          ACC        Airport Consultants Council
          ACI        Airports Council International—North America
          ACIP       Airport Capital Improvement Plan
          AIP        Airport Improvement Program
          AMIS       Airport Marketing Information System
          ATA        Air Transport Association of America
          FAA        Federal Aviation Administration
          GAO        General Accounting Office
          NASAO      National Association of State Aviation Officials
          NPIAS      National Plan of Integrated Airport Systems
          PFC        passenger facility charge


          Page 25                               GAO/RCED-97-99 Airport Development Needs
Appendix I

Calculation, Comparison, and Reconciliation
of the Estimates of Airport Capital
Development Needs
                     In order to discern the nature and extent of the differences among the
                     three capital needs estimates, it was necessary to understand how the
                     respective databases were compiled and the estimates were calculated.
                     Only then could we compare the results and begin the process of
                     reconciling the estimates.


Airports’ Estimate   In March 1996, the airports, through the Airports Council
                     International—North America (ACI) and the American Association of
                     Airport Executives (AAAE), estimated airport capital development needs at
                     $60 billion for the 6-year period from 1997 through 2002. In 1996, ACI/AAAE
                     conducted a survey of 140 hub airports to derive an estimate of airport
                     capital needs. The survey sought information on hub airports’ total capital
                     needs, including AIP-ineligible projects, and asked airport officials to
                     estimate how much would be eligible for AIP funds and whether financing
                     had been committed to the project. Using information from the 88 airports
                     that responded to the survey, ACI/AAAE extrapolated needs for all 140 hubs
                     on the basis of their relative number of passenger enplanements. ACI/AAAE
                     relied upon the Federal Aviation Administration’s (FAA) National Plan of
                     Integrated Airport Systems (NPIAS) to estimate the capital needs for all
                     other categories of airports. ACI/AAAE also subtracted some airport projects
                     after the survey was completed on the basis of their judgments about the
                     likelihood that these projects would be undertaken. Finally, ACI/AAAE
                     converted estimates to future costs by adding a 3-percent annual inflation
                     factor. Table I.1 shows ACI/AAAE’s reported estimate of airport capital
                     development needs for 1997 through 2002 and our reconstruction of that
                     estimate, by category of airport.




                     Page 26                               GAO/RCED-97-99 Airport Development Needs
                                         Appendix I
                                         Calculation, Comparison, and Reconciliation
                                         of the Estimates of Airport Capital
                                         Development Needs




Table I.1: ACI/AAAE’s Estimate and
GAO’s Recalculation of Airport Capital   Dollars in millions
Development Needs, 1997 Through                                                                                               GAO’s
2002                                                                    Number of                       ACI/AAAE’s     reconstructed
                                                                         airportsa                       estimated         estimated
                                         Airport type                       (1996) Source               6-year total      6-year total
                                         Large hub                             29 Survey                    $28,900          $28,598
                                         Medium hub                            40 Survey                     11,600            10,344
                                         Small hub                             71 Survey                      3,500             3,211
                                         Nonhub and                           435 FAA                         3,300             3,249
                                         other commercial
                                         service
                                         Reliever                             325 FAA                         2,800             2,209
                                         General aviation                   2,429 FAA                         4,000             3,373
                                         Inflation                                  ACI/                      5,900             4,936
                                         adjustment                                 AAAE
                                         Total                              3,329                           $60,000          $55,920
                                         a
                                             As reported by ACI/AAAE.



                                         In reconstructing ACI/AAAE’s estimate, and strictly adhering to its method of
                                         analysis, we calculated total needs of $55.9 billion over 6 years, $4.1 billion
                                         less than ACI/AAAE reported. The $4.1 billion includes $3.1 billion in
                                         estimated needs and $1 billion in inflation adjustment. Most of the
                                         difference resulted from different calculations for hub airport costs, cost
                                         figures attributed to FAA for nonhub primary and general aviation airports,
                                         and the inflation adjustment. We discussed these differences with the ACI
                                         and AAAE officials responsible for their estimate, who concurred with our
                                         conclusion.


Airlines’ Estimate                       In March 1996, the airlines, through the Air Transport Association of
                                         America (ATA), estimated airport capital development needs to be about
                                         $20 billion for the 5-year period from 1996 through 2000. ATA defined
                                         airport capital needs more narrowly than ACI/AAAE, including almost
                                         exclusively AIP-eligible projects at the nation’s 421 largest commercial
                                         service airports, or primary airports. To derive its estimate, ATA relied on a
                                         database, called Airport Marketing Information System (AMIS), purchased
                                         from a private vendor. AMIS extensively uses the NPIAS for its structure and
                                         much of its information but also updates it using airport master plans,
                                         system plans, and capital improvement plans developed by airports and
                                         states, which detail the projects that are likely to be funded and
                                         completed. The version of AMIS used by ATA is based on the 1994 NPIAS,



                                         Page 27                                            GAO/RCED-97-99 Airport Development Needs
                                       Appendix I
                                       Calculation, Comparison, and Reconciliation
                                       of the Estimates of Airport Capital
                                       Development Needs




                                       instead of the 1996 NPIAS update used by FAA.1 Furthermore, because AMIS is
                                       largely derived from the NPIAS, it does not generally include projects not
                                       eligible for AIP grants. Less than 1 percent of ATA’s total estimate included
                                       AIP-ineligible projects. We reconstructed ATA’s estimate, using the same
                                       AMIS database and ATA’s methods, and found that they had accurately
                                       calculated their estimate. Table I.2 below presents ATA’s estimate of airport
                                       capital development needs for 1996 through 2000.

Table I.2: ATA’s Estimate of Airport
Capital Development Needs, 1996        Dollars in millions
Through 2000                                                                                  Number of
                                       Airport type                                       airports (1996)                        5-year total
                                       Large hub                                                         29                          $11,279
                                       Medium hub                                                        40                             3,523
                                       Small hub                                                         71                             2,921
                                       Nonhub                                                           281                             2,101
                                       Total                                                            421                          $19,824



FAA’s Estimate                         In April 1996, FAA estimated airport capital development needs to be
                                       $32.7 billion for the 5-year period from 1996 through 2000. In making its
                                       estimate, FAA relied on the NPIAS database of AIP-eligible projects at the
                                       3,331 national system airports. The NPIAS is a compilation of FAA’s regional
                                       office data on individual airport projects from approved airport master
                                       plans, system plans, and discussions with airport officials. Under FAA’s
                                       guidance, all airport projects for up to 10 years in the future are entered
                                       into the NPIAS database and coded according to project type, estimated
                                       cost, year of planned expenditure, project description, and grant eligibility.

                                       In deriving its estimate of airport capital needs, the FAA defined capital
                                       needs as development projects that are eligible for AIP funding at any of
                                       the national system airports. FAA excluded AIP-ineligible projects because
                                       the agency is not responsible for funding these projects. FAA also excluded
                                       projects to plan development because they do not represent infrastructure
                                       development. Table I.3 presents FAA’s estimate of airport capital
                                       development needs for the 5-year period from 1996 through 2000.




                                       1
                                       In total, for the same 5-year period and categories of projects and airports, the AMIS and the 1994
                                       NPIAS differed by about $108 million, or 0.5 percent.



                                       Page 28                                             GAO/RCED-97-99 Airport Development Needs
                                       Appendix I
                                       Calculation, Comparison, and Reconciliation
                                       of the Estimates of Airport Capital
                                       Development Needs




Table I.3: FAA’s Estimate of Airport
Capital Development Needs, 1996        Dollars in millions
Through 2000                                                                             Number of
                                       Airport type                                  airports (1996)               5-year total
                                       Large hub                                                 29                   $14,650
                                       Medium hub                                                40                      5,105
                                       Small hub                                                 71                      3,183
                                       Nonhub                                                   281                      2,995
                                       Other commercial service                                 143                        692
                                       Reliever                                                 330                      2,238
                                       General aviation                                       2,437                      3,808
                                       Total                                                  3,331                   $32,671

                                       We verified FAA’s estimate by reconstructing it using the NPIAS and
                                       following FAA’s methodology. We were able to closely, but not exactly,
                                       match FAA’s estimate of $32.671 billion. Our total, using the same criteria,
                                       was $32.679 billion, for a total difference of $8 million over 5 years. The
                                       difference we found is attributable to slightly different versions of the
                                       NPIAS.


                                       To the extent, however, that any estimate of planned development uses
                                       the NPIAS database, it should be noted that about 14 percent of the FAA field
                                       offices that update the NPIAS screen projects for their likelihood of
                                       receiving AIP grants before including those projects in the NPIAS database.
                                       Thus, the representation of need in the NPIAS may be less comprehensive
                                       for airports in those locations in comparison to other locations where FAA
                                       field offices include all AIP-eligible projects without regard to expectations
                                       of funding. Also, about 18 percent of FAA field offices include projects
                                       ineligible for AIP funding in their NPIAS database; for example, 7.3 percent
                                       of the projects in the 1996-through-2000 NPIAS were ineligible for AIP
                                       funding. While FAA screened these projects out of the 1996-through-2000
                                       NPIAS when preparing its estimate of planned development needs, ATA did
                                       not screen out AIP-ineligible projects.


Comparison of the                      Once we had reconstructed each of the three airport capital development
Estimates of Airport                   needs estimates, we compared them across airport categories and by types
Capital Development                    of projects. Table I.4 compares the total and average reported estimates of
                                       each.
Needs




                                       Page 29                                        GAO/RCED-97-99 Airport Development Needs
                                          Appendix I
                                          Calculation, Comparison, and Reconciliation
                                          of the Estimates of Airport Capital
                                          Development Needs




Table I.4: Comparison of Estimated Capital Needs Reported by ACI/AAAE, ATA, and FAA
Dollars in millions

                   Number of                           Total estimated needs
                     airports                 ACI/AAAEa              ATA             FAA                     Annual average
Airport type           (1996) Project type     1997-2002        1996-2000       1996-2000        ACI/AAAE                ATA              FAA
Large hub                 29            E         $15,600          $11,279         $14,650            $2,600           $2,256           $2,930
Medium hub                40            E            5,400              3,523         5,105              900              705            1,021
Small hub                 71            E            2,400              2,921         3,183              400              584              637
Nonhub                   281            E            3,300              2,101         2,995              550              420              599
Total primary            421            E           26,700             19,824        25,933            4,450            3,965            5,187
airports
Other                    143            E              N/Ab              N/A            692              N/A              N/A              138
commercial
service
Reliever                 330            E            2,800               N/A          2,238              467              N/A              448
General aviation       2,437            E            4,000               N/A          3,808              667              N/A              762
Total primary          3,331            E           33,500               N/A         32,671            5,583              N/A            6,534
and other
airports
Total hub                140             I          20,600               N/A            N/A            3,433              N/A              N/A
airports
Total needs                        E and I          54,100             19,824        32,671            9,017            3,965            6,534
Inflation                               IA           5,900               N/A            N/A              983              N/A              N/A
adjustments
Total estimate                                    $60,000          $19,824         $32,671          $10,000            $3,965           $6,534
                                          Legend

                                          E = AIP-eligible.

                                          I = AIP-ineligible.

                                          IA = Inflation adjustment.
                                         a
                                           ACI/AAAE combined the needs of primary nonhub and other commercial service airports in its
                                         estimate.
                                          b
                                           N/A means not applicable and indicates that the estimate did not include this category of airport
                                          or project.



                                         As the preceding table shows, ACI/AAAE’s estimate of needs is greater than
                                         the others because it includes AIP-ineligible projects that account for more
                                         than $20 billion over 6 years. Similarly, FAA’s estimate of capital needs
                                         exceeds ATA’s estimate because it includes a broader range of airports. We
                                         were not able to compare the various estimates according to project type
                                         because ACI/AAAE coded projects differently from ATA or FAA.



                                         Page 30                                              GAO/RCED-97-99 Airport Development Needs
                                        Appendix I
                                        Calculation, Comparison, and Reconciliation
                                        of the Estimates of Airport Capital
                                        Development Needs




Reconciliation of ATA’s,                The process of reconstructing and comparing the three total capital needs
FAA’s, and ACI/AAAE’s                   estimates—$19.8 billion for ATA, $32.7 billion for FAA, and $60.0 billion for
                                        ACI/AAAE—allowed us to measure the source and magnitude of their
Estimates
                                        differences. Combining the various effects and eliminating double
                                        counting resulted in the reconciliation scheme appearing in table I.5.

Table I.5: Reconciliation of the 1996
Estimates of Total Airport Capital      Dollars in millions
Development Needs                                                                                                        Total
                                        Source           Description                                                 estimate
                                        ATA              Primary airports                                             $19,824
                                        Add items in FAA’s estimate that are not in ATA’s
                                                         Update from 1994 to 1996 NPIAS                                 6,460
                                                         Other commercial service airports                                692
                                                         Reliever airports                                              2,238
                                                         General aviation airports                                      3,808
                                        Subtract items in ATA’s estimate that are not in FAA’s
                                                         AIP-ineligible projects                                         (193)
                                                         Projects to plan development                                      (43)
                                                         All other differences                                           (115)
                                        FAA              All airports, AIP-eligible only                              $32,671
                                        Add items in ACI/AAAE’s estimate that are not in FAA’s
                                                         AIP-ineligible projects                                       20,600
                                                         Overstatement in ACI/AAAE’s estimate (before inflation
                                                         adjustment)                                                    3,116
                                                         ACI/AAAE’s inflation adjustment                                5,900
                                        Subtract items in FAA’s estimate that are not in ACI/AAAE’s
                                                         All other differences                                          (2,287)
                                        ACI/AAAE         All airports, all projects                                   $60,000

                                        To reconcile ATA’s and FAA’s estimates, four adjustments had to be made.
                                        First, the ATA estimate, which is based on the AMIS database, is in turn a
                                        derivative of the 1994 NPIAS. The 1994 NPIAS is about $6.5 billion less than
                                        the 1996 NPIAS for the same 1996-through-2000 time period because the
                                        NPIAS does not account for many projects beyond 5 years. Second, FAA
                                        included all other commercial service airports (between 2,500 and 10,000
                                        annual enplanements), reliever airports, and general aviation airports in its
                                        estimate, whereas ATA included only primary airports (enplanements
                                        greater than 10,000). Third, ATA’s estimate included a small number of
                                        planning projects and AIP-ineligible development projects that FAA did not
                                        include. Finally, the remaining difference of $115 million cannot be




                                        Page 31                                       GAO/RCED-97-99 Airport Development Needs
Appendix I
Calculation, Comparison, and Reconciliation
of the Estimates of Airport Capital
Development Needs




specifically attributed to a single factor but is likely caused by the
differences in the number and valuation of the projects between the two
databases.

To reconcile FAA’s and ACI/AAAE’s estimates, four adjustments had to be
made. First, and most significantly, ACI/AAAE included $20.6 billion of
AIP-ineligible projects that FAA did not include. Second, the errors we found
in ACI/AAAE’s estimate that led to an overstatement did not occur in FAA’s
estimate. To avoid double counting when calculating the inflation
adjustment, we used the pre-inflation amount of the overstatement,
$3.1 billion. Third, ACI/AAAE’s estimate includes a 3-percent inflation
adjustment of $5.9 billion that FAA did not include in its estimate. Finally,
the remaining difference between the two estimates, about $2.3 billion,
cannot be specifically attributed to a single factor but is due to differences
in the time periods covered (1996 through 2000 for FAA and 1997 through
2002 for ACI/AAAE) and differences in the number and valuation of the
projects in the two databases.




Page 32                                       GAO/RCED-97-99 Airport Development Needs
Appendix II

Regression Model and Results


              This appendix describes the regression model that we developed to
              estimate the association between forecasted growth in aviation activity
              and the dollar value of capacity-related projects. Regression modelling is a
              technique that identifies the strength of association of one explanatory
              factor with the dependent variable, while controlling for the influences of
              other external factors. Using this model, we found a positive and
              statistically significant relationship between forecasted activity growth
              (the relevant explanatory factor), measured either as aircraft operations or
              enplanements, and planned capacity spending (the dependent variable).
              Time and data limitations precluded testing more elaborate specifications,
              and therefore, our results should be taken as suggestive rather than
              conclusive evidence. The following sections discuss the regression data,
              model, and results.


Data          All of the data we used came from FAA’s 1996 NPIAS database. NPIAS
              contains data on, among other things, individual airport characteristics,
              such as the type of airport and the current and forecasted level of aircraft
              operations and enplanements, and projected capital spending over 5 years.
              For our analysis, we computed the level of forecasted activity growth in
              aircraft operations (take-off and landings) and enplanements by
              subtracting current levels from levels forecasted for 5 years in the future.
              We also created a measure of each airport’s current congestion level to
              serve as a control variable, by dividing each airport’s actual operations by
              its capacity number of operations. For the dependent variable, we
              summed projected spending for capacity-related projects for 5 years, 1996
              through 2000.


Model         For our analysis, we regressed planned capacity spending on one of two
              explanatory factors—forecasted growth in operations or forecasted
              growth in enplanements—and a control variable, congestion. We included
              congestion as a control variable because we anticipated that heavily
              congested airports may be more likely to plan high levels of spending on
              capacity-related projects. While we performed our regression analysis
              using both linear and log-linear specifications, we based our results on the
              linear specifications because in some instances negative activity growth
              rates limited the appropriateness of the log-linear model. We also
              estimated the model for two groups of airports—the 421 airports classified
              as primary airports and, within this group, the 69 airports designated as
              large and medium hub airports. Time and data limitations precluded




              Page 33                               GAO/RCED-97-99 Airport Development Needs
          Appendix II
          Regression Model and Results




          testing more elaborate specifications, and therefore, our results should be
          taken as suggestive rather than conclusive evidence.


Results   We found a positive and statistically significant (at the 95-percent level)
          relationship between forecasted growth in aviation activity and planned
          capacity spending. This relationship exists using either operations or
          enplanements as the measure of aviation activity and for both the more
          inclusive set of 421 primary airports and the largest 69 airports (large and
          medium hubs). For all 421 primary airports, planned capacity spending is
          considerably more sensitive to changes in the forecasted level of
          enplanements than to changes in the forecasted level of operations, but
          when examining just the large and medium hubs, we found an equal
          sensitivity to each measure.

          We also found a positive relationship between our congestion variable and
          planned capacity spending. This relationship was statistically significant at
          the 95-percent level in the two regressions using the 421 primary airports,
          and at the 90-percent level for the regression using the 69 large and
          medium hub airports when we used operations as the measure of aviation
          activity. The explanatory power of our model, as measured by the multiple
          correlation coefficient (R2) statistic,1 was greater for the regressions using
          the 421 primary airports. Table II.1 presents the regression coefficients
          and summary statistics used in our analysis.




          1
           The greater the R2, the greater the association between the set of explanatory variables and the
          dependent variable and, therefore, the greater the proportion of the variance in the dependent variable
          that can be accounted for by the explanatory variables. This statistic can range from 0 to 1.



          Page 34                                             GAO/RCED-97-99 Airport Development Needs
                                           Appendix II
                                           Regression Model and Results




Table II.1 Regression Coefficients and Summary Statistics
                                          All primary airports                                Large and medium hub airports only
                              Forecasted growth in        Forecasted growth in           Forecasted growth in            Forecasted growth in
                                aircraft operations             enplanements               aircraft operations                 enplanements
Explanatory factor                          993,000                         52,600                      1,460,000                           38,300
coefficient                                     (8.2)                          (9.0)                          (3.3)                            (2.1)
Elasticity of
explanatory factor                               .37                             .74                            .54                            .53
Congestion coefficient                  102,000,000                    42,700,000                    188,000,000                     149,000,000
                                                (6.4)                         (2.3)                          (1.9)                           (1.4)
Constant                                –27,400,000                   –11,700,000                    –96,500,000                     –62,500,000
Number of observations                           421                            421                              69                             69
 2
R                                                .25                             .27                            .21                            .13
                                           Note: t-statistics are in parentheses, coefficients have been rounded to 3 significant digits,
                                           elasticities have been computed at mean values, and the forecasted growth variables are
                                           measured in thousands.

                                           Source: GAO’s analysis of NPIAS data.



                                           The regression coefficients for the explanatory factors shown in table II.1
                                           indicate the change in planned capacity spending for each additional unit
                                           of operations or passenger enplanements, when holding the control
                                           variable constant. For example, the coefficient of 993,000 means that for
                                           each additional forecasted unit of operations at 1 of the 421 primary
                                           airports, the model indicates an additional $993,000 of planned capital
                                           spending over 5 years.

                                           The elasticity measure in table II.1 compares the relative sensitivity of
                                           planned capital spending with respect to changes in the explanatory
                                           factors. For all 421 primary airports, we estimate that at mean values of
                                           our variables, the elasticity of planned capacity spending is about twice as
                                           great with respect to forecasted enplanement growth (.74) than with
                                           respect to the forecasted growth in operations (.37). That is, at mean
                                           values, a 1-percent increase in anticipated enplanements is associated with
                                           nearly a 0.75-percent increase in planned capacity spending, while a
                                           1-percent increase in anticipated aircraft operations is associated with an
                                           increase in planned capacity spending only about half that large. However,
                                           for the 69 large and medium hub airports, we estimate that at mean values
                                           of our variables the elasticities are almost identical—.53 for enplanements
                                           and .54 for operations. That is, at mean values, we estimate that a
                                           1-percent increase in either enplanements or operations is associated with
                                           slightly more than a 0.5-percent increase in planned capacity spending.



                                           Page 35                                              GAO/RCED-97-99 Airport Development Needs
Appendix III

Scope and Methodology


               To compare the various airport capital needs estimates and determine why
               they differ, we reconstructed, compared, and reconciled each of the three
               main estimates of needs. Appendix I describes how the three databases
               were compiled and our reconciliation process. While we did not verify the
               accuracy of the data in each of the databases, we determined the accuracy
               of the calculation through our process of reconstructing the estimates. In
               addition, we compared categories of airports and types of projects, as well
               as individual projects, across the databases to ascertain how complete the
               data sets were. We also discussed with ACI/AAAE, ATA (and its data vendor),
               and FAA officials the process by which their data were obtained and how
               they were input, maintained, and compiled. In the two instances in which
               our reconstructed estimates did not match the reported estimates, we
               discussed our results with ACI/AAAE and FAA officials to understand why
               they differed and to obtain agreement that our reconstructed estimate was
               accurate. Finally, by comparing the three databases, we were able to
               isolate and measure the differences among each of the three estimates.
               Because the projects in the databases could not be linked by a common
               identifier, it is not possible to measure to what extent the databases varied
               as a result of the differences in valuation for the same projects versus the
               differences in the array of projects at each airport. Therefore, these two
               effects were combined as a default measure.

               To provide an up-to-date range of estimates for airport capital
               development needs over the 5 years from 1997 through 2001, we used FAA’s
               preliminary 1997 NPIAS database, supplemented by other data sources. To
               obtain information on airport development needs that are not eligible for
               AIP grants, we relied on three data sources. We used an updated version of
               AMIS, the database previously used by ATA, to estimate the value of projects
               funded by passenger facility charges (PFC). We used the results of two
               different ACI/AAAE surveys to estimate the value of AIP-ineligible projects at
               hub airports. Finally, we used a survey conducted for us by the National
               Association of State Aviation Officials (NASAO) of their members to
               estimate the needs of airports in state system plans but not included in the
               NPIAS.1 Forty-two states and Puerto Rico responded to the survey. We
               selected several criteria for defining need—from very narrow (safety,
               security, environmental, and reconstruction projects) to very broad (all
               projects regardless of eligibility at all airports for which data are
               available)—and applied them to the most current data available from FAA,
               ACI/AAAE, and state aviation officials. As with the first objective, we did not
               authenticate the accuracy of individual data elements.


               1
                NASAO represents all 50 states, Guam and Puerto Rico.



               Page 36                                           GAO/RCED-97-99 Airport Development Needs
Appendix III
Scope and Methodology




To identify the key factors that affect airport development and how these
will affect future capital needs, we interviewed numerous aviation
industry experts and reviewed relevant studies. For FAA, we interviewed
officials in headquarters and at all 31 FAA Regional Airport Division Offices
and Airport District Offices. We also reviewed all NPIAS and predecessor
plans for the national system published since 1947, recent aviation
forecast reports, and the FAA’s 1995 Aviation Capacity Enhancement Plan,
the latest such plan available. For airport representatives, we held
numerous discussions with officials from ACI and AAAE and interviewed 13
airport directors or commissioners. For airline representatives, we spoke
with ATA officials and held a roundtable discussion with representatives
from 10 passenger and cargo airlines. Finally, we held discussions with
various aviation experts, including officials from six airport engineering
and planning firms and two academics active in consulting for airports. All
of these people were asked about the factors that have historically
influenced airport development and the trends that are likely to affect
future development needs. In addition, we performed a regression analysis
of various predicted measures of aviation activity and future estimates of
needs to better understand the relationship between predicted growth and
capacity-related development. This regression analysis is more completely
described in appendix II.

We performed our review from December 1996 through March 1997 in
accordance with generally accepted government auditing standards.




Page 37                                GAO/RCED-97-99 Airport Development Needs
Appendix IV

Major Contributors to This Report


               Gerald L. Dillingham
               R. Jerry Aiken
               Paul Aussendorf
               Beverly Ann Bendekgey
               Charles R. Chambers
               Jay R. Cherlow
               Mitchell B. Karpman
               Joseph D. Kile
               Mark Premo
               Stanley G. Stenersen
               Randall B. Williamson




(341511)       Page 38                 GAO/RCED-97-99 Airport Development Needs
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