By: Robert Lakind, Esq.
The CARES Act, which was passed On March 27, 2020, provides economic aid to airports by making $10 billion in grants available. Further, as explained below, unlike traditional AIP Grants, generally, for grants issued under the CARES Act, the FAA will cover 100% of the allowable cost of the project for which the grant is issued.
Recipients of traditional AIP Grants typically see in their Grant Agreements a provision which states the FAA will pay a certain percentage of the allowable cost incurred for completing the project for which the grant is issued. For a particular grant, the portion of the cost for a project that is paid by the FAA is sometimes referred to as the “Federal share,” while the portion of the cost that is the airport sponsor’s responsibility is sometimes referred to as the “local share.” As described in greater detail below, the CARES Act provide a significant benefit as it increases the “Federal share” of allowable costs to 100% for (a) certain grants already planned for fiscal year 2020 and (b) for an additional $9.5 billion in grants made available under the CARES Act.
First, the CARES Act makes available $500 million to cover the “local share” of grants already planned for fiscal year 2020.
Second, the CARES Act sets aside approximately $9.5 billion to be used for additional airport grants, where the Federal share payable for such grants will be 100%. This approximately $9.5 billion in additional grants will be allocated among airports as follows:
- All Commercial Service Airports: Approximately $7.4 billion will be available for grants to all commercial service airports. The $7.4 billion in funds will be allocated among commercial service airports as follows: (i) 50% of these funds will be allocated among all commercial service airports based on each sponsor’s calendar year 2018 enplanements as a percentage of total 2018 enplanements for all commercial service airports and (ii) the remaining 50% percent of such funds will be allocated among all commercial service airports based on an equal combination of each airport sponsor’s fiscal year 2018 debt service as a percentage of the combined debt service for all commercial service airports and each airport sponsor’s ratio of unrestricted reserves to their respective debt service.
- Commercial Service Airports With 10,000+ Annual Passenger Boardings: Approximately $2 billion will be available for commercial service airports that have more than 10,000 annual passenger boardings. Generally, these funds will be allocated among these airports in the standard way passenger entitlements are allocated to commercial service airports with more than 10,000 annual passenger boardings.
- General Aviation Airports: Approximately $100 million dollars is dedicated to general aviation airports.
Grants may only be used for purposes for which airport revenues may be used under the law. Moreover, for any airport that receives any of the above grant funding, it must retain through December 31, 2020, at least 90% of the individuals employed by the airport on March 27, 2020. However, this requirement can be waived if the airport can demonstrate a hardship. Further, this requirement does not apply to nonhub or nonprimary airports. Overall, the additional airport funding made available by the CARES Act provides a significant opportunity to airport sponsors.
About the Author: Robert Lakind is a former airline pilot who now works as an aviation attorney. Through his career, he has acquired extensive knowledge and experience regarding compliance with the Federal Aviation Regulations (FARs) and issues that arise in aviation operations. Rob represents airports, 135 operators, insurance companies, and other companies involved in aviation. The above article is for informational purposes only. If you have questions about grants available to your specific airport under the Airport Improvement Program or the CARES Act you should contact an aviation attorney.
Rob Lakind is an aviation attorney and partner with Szaferman Lakind. To contact Rob, please email rlakind@szaferman.com or call 609.275.0400.
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The foregoing is intended for general information purposes and is no substitute for specific legal advice.
