AAAE Responds to FAA's Draft Policy on Air Carrier Incentive Programs

On April 5th, AAAE filed comments in response to the Federal Aviation Administration's (FAA) draft policy that would provide guidance to airports on how to determine if its Air Carrier Incentive Program (ACIP) complies with federal grant obligations, which apply to any airport that receives financial assistance through the Airport Improvement Program (AIP). The proposed policy statement, if finalized, would supersede the 'Air Carrier Incentive Program Guidebook' ('ACIP Guidebook'), which was published in 2010 to provide guidance to airports on these incentive programs. 

In our comments, AAAE supported several proposed changes that would provide more flexibility for airport sponsors to design an ACIP that is most suitable for their own unique circumstances, including the ability to incentivize seasonal service or allow airport staff to advise non-airport entities on administering ACIPs. However, we also relayed our members' concerns regarding other changes, such as (1) new requirements regarding the disclosure and publication of ACIPs; (2) a prohibition on providing marketing funds directly to carriers; and (3) removing the ability for airports to incentivize a carrier to increase the frequency of flights to a specific destination and improve capacity.

You can read AAAE's comments here. We appreciate everyone who submitted feedback regarding the draft policy through our survey. 

Background. Airports and communities use air carrier incentives in order to attract new air service, both for new entrant carriers to begin service at an airport or to incumbent carriers at an airport to add new routes. If an airport receives AIP funding, the airport must comply with a series of grant assurances. Each airport is responsible for ensuring that its ACIP is consistent with these grant obligations, which govern the extent to which an airport sponsor can provide incentives to an air carrier in return for new air service at the airport.  

In 2010, FAA published the ACIP Guidebook, which provides detailed guidance on the use of incentives for air carriers to begin serving an airport or service on a new route from the airport. Since publication of the ACIP Guidebook, FAA has reported that the number of ACIPs have significantly increased, with more than 250 U.S. commercial service airports having implemented such programs. In February, FAA published and requested comments on a draft update to the policies governing ACIPs that reflects the experience the agency has gained with these incentive programs. 

Summary of AAAE's Response to FAA. The following is an overview of some key recommendations that AAAE emphasized throughout our comments based on the category of change in the draft policy. To summarize, we recommended that FAA: 

• 'New Service' Definition: Allow airport sponsors to continue to incentivize the 'increased frequency of flights to a specific destination,' which FAA has proposed to remove from the revised definition of 'air service;' 

• Seasonal Service: Allow airport sponsors to incentivize new seasonal air service, although we encouraged FAA to consider being less prescriptive with the proposed time frame when this would be permitted in order to account for seasonal differences between regions; 

• Aircraft Size/Upgauging: Allow airport sponsors to continue to incentivize an increase in landed weight of air carrier aircraft, known as 'upgauging practices,' under the conditions proposed in the draft policy; 

• Air Cargo Incentives: Allow airport sponsors to develop an ACIP for 'new cargo service,' separate and apart from any ACIP offered for new passenger service; 

• ACIP Transparency and Disclosures: Reconsider the proposed transparency or disclosure requirements or, at the very least, allow airport sponsors to satisfy these requirements by either making information about their ACIP available to carriers upon request or by notifying the public that the ACIP exists; 

• Sponsor Assistance to Non-Sponsor ACIPs: Allow airport staff to provide 'technical assistance' to non-airport entities that are considering or administering ACIPs, but do not limit the type of technical assistance that staff may provide to such entities; 

• Payments for Marketing Service: Allow airport sponsors to continue to provide marketing funds directly to a carrier-instead of a marketing provider-under some circumstances, especially if a marketing plan or agreement has been developed and includes appropriate invoices, receipts, and proof of delivery prior to the airport reimbursing payments to the carrier; and 

• Limited Budget for ACIP: Provide airport sponsors with more flexibility to scope an appropriate budget for its ACIP, regardless of size, and to use processes other than an RFP to select an air carrier for incentives. 

What's Next? FAA will begin to consider 20 comments, including 15 from airport sponsors, that were filed in response to the request for feedback. FAA has indicated to AAAE that the agency's goal is to finalize the policy by the end of September. Given some of the concerns that were raised regarding the draft policy, AAAE will continue to engage with FAA to ensure they understand the potential implications if FAA moves forward with the policy as proposed. In the meantime, we will keep our members apprised of any updates.