Airport Alert: Negotiations Continue on Stimulus; Airport Relief Portion Includes $10 Billion
Negotiations between Senate and House leaders and the Administration on a coronavirus relief package are continuing. While a final agreement is not yet at hand, lawmakers appear to have coalesced around a plan that could provide $10 billion to airports.
Legislative text is now circulating broadly on Capitol Hill that includes a stimulus package, that would include $58 billion in loans to passenger and cargo carriers as part of broader $500 billion pool of loans and loan guarantees to eligible businesses, states, and municipalities; and a separate "emergency appropriations" package, which addresses airport needs and other funding requirements across the federal government.
If a deal comes together, and if the emergency appropriations package is included, the details are very positive for airports. Our quick read of the legislative language is as follows:
- $7.4 Billion for Any Lawful Purpose: The package includes $7.4 billion to airports for "any purpose for which airport revenues may be lawfully used" at a 100 percent federal share. Of that amount, funds would be distributed in the following ways:
- Grants Based on Enplanements: The proposal would require the FAA to distribute 50 percent of the funds, or $3.7 billion, to airports based on their "calendar year 2018 enplanement as a percentage of total 2018 enplanements for all commercial service airports."
- Grants Based on Debt Service: The remaining 50 percent of the funds would be dedicated toward helping airports with their debt service payments. The FAA would be required to distribute funds in this category based on "an equal combination of each sponsor's fiscal year 2018 debt service as a percentage of the combined debt service for all commercial service airports and each sponsor's ratio of unrestricted reserves to their respective debt service."
- $2 Billion for Apportionments: The plan would also require the FAA to distribute $2 billion to airports based on a modified apportionment formula at 100 percent federal share. It would eliminate PFC turnbacks and the cap on maximum entitlements. It would preserve doubled entitlements and retain the minimum entitlement for primary airports. And it would preserve the apportionment for airports that have more than 8,000 enplanements.
- $500 Million for 100 Percent Federal Share of FY20 AIP Grants: The Senate proposal calls for not less than $500 million to pay a federal share of 100 percent federal share for AIP funding that Congress already approved as part of the Fiscal Year 2020 appropriations process.
- $100 Million for General Aviation Airports: $100 million would be would be reserved for nonprimary airports also at a 100 percent federal share.
- Administrative Expenses: The plan would allow the FAA to retain up to 0.1 percent of the overall airport funding to administer the grants.
Airline Provisions: The stimulus portion of the package now circulating includes $58 billion in loans and loan guarantees for the passenger and cargo carriers - the same amount included in a proposal that Senate Majority Leader Mitch McConnell (R-KY) unveiled late last week.
The Senate plan would suspend certain aviation excise taxes to January 1, 2021 and place limitations on executive compensation for carriers that receive assistance. It also retains a Republican proposal that would allow DOT "to the extent reasonable and practicable" to require air carriers receiving assistance to continue providing air service to communities that had received service before March 1, 2020.
What's Next: The Senate is scheduled to convene at 2 p.m. with a key procedural vote at 3 p.m. on "H.R. 748, the legislative vehicle for Coronavirus Phase III." That vote will be a good indication as to whether or not a deal has been reached that can pass the Senate and House. A failed vote will signal that more negotiations are needed. Leader McConnell has indicated that he wants the Senate to vote the third coronavirus relief package on Monday. The House is expected to follow with a vote to clear the package thereafter.
We will have more details and updates as they are available.
