CHAPTER 4

Integration

This chapter addresses the integration of airports into a more multimodal transportation system, along with developments in advanced air mobility and how funding and regulatory issues changed over time. The chapter begins with a discussion of some of the issues facing airports in 2023, when the workshops were held. Then it discusses how changes might occur to address some of these challenges over the next few decades. The chapter ends with a discussion of how the airport of 2050 might function, along with remaining challenges that participants did not think would be resolved by 2050.

State of Integration in 2024

Multimodal Integration

By the end of 2023, commercial air travel demand had resumed the pre-pandemic pattern of growth, with the number of travelers finally exceeding pre-pandemic levels (TSA, 2024). In some cases, airlines and airports were again struggling to meet demand. In 2023, most U.S. airports were not well integrated with other modes of intercity transportation. A few airports [e.g., Baltimore/Washington International Thurgood Marshall Airport (BWI), Newark] were accessible by Amtrak intercity rail, but the only interlink service (meaning that passengers could purchase a single ticket for both rail and air transportation) ended in 2021 (Klint, 2020). In 2023 a new rail line, privately operated by the firm Brightline, began offering rail service between the Orlando airport and Miami. This was the first new private rail service to open in over a century in the United States (Mazzei and Chokshi, 2023).

Ground transportation was dominated by personal cars and ride-hailing (e.g., taxis and transportation network companies (TNCs) in the early 2020s [Le Bris et al., 2023]). Despite congestion from these access modes, airports could not always widen access roads and curbsides, because of limited landside space availability, so they were thinking creatively about how to alleviate growing traffic congestion. Remote consolidated rental car facilities [e.g., ATL, George Bush Intercontinental (IAH)] and ground transportation centers [e.g., Los Angeles International Airport (LAX)] were examples of solutions that addressed this constraint. For example, the LAX Landside Access Modernization Program created a remote and decentralized curbside facility (LAWA, 2016).

Mass transit (rail or bus that serves the metropolitan area) had been available at most large- and medium-hub airports for years. However, its use was limited by slow travel time from the airport to downtown relative to other forms of transit, the amount of service provided, and whether there were convenient connections available for passengers to reach their final destinations.

AAM was a catch-all term for a variety of experiments with new types of aircraft that promised a new way to fly. Generally, these included some combination of electrification, aircraft designs

that allowed for vertical or short take-offs and landings [electric vertical take-off and landing (eVTOL) or electric short take-off and landing (eSTOL)], and the capability to fly autonomously. These small aircraft were being designed for a few or a few dozen passengers that would be best suited to short-haul flights. Proponents envisioned on-demand air taxi services in urban areas (urban air mobility), and networks of AAM aircraft serving rural areas (rural air mobility). In 2023, airports were continuing to consider how AAM might impact their operations and demand for air services. Research, development, and test deployments around AAM had been in progress for the previous decade or so. While the promised “flying taxis” still seemed far in the future (Treisman, 2023), several milestones had been reached: the first successful test flight of a commercial electric aircraft took place in 2022 (Pickett, 2022) and an eVTOL aircraft was delivered for military use in 2023 (Wolfe, F., 2023).

Funding and Regulatory Issues

For many years, federal grant programs provided a reliable source of funding for critical projects, especially on the airside. In 2022, there had been a positive cash balance of approximately $12 billion for airport infrastructure, stemming from a combination of sources like the FAA Trust Fund, general funding, and special assistance after COVID-19. Funding was distributed through entitlement programs, state apportionment, the Small Airport Fund, and other mechanisms.

In addition, the one-time BIL provided $25 billion for airport and air control projects, to be distributed in several ways. By early 2024, the FAA had made three out of five rounds of BIL-funded awards to airports. As of fiscal year (FY) 2024, almost $9 billion in formula-allocated Airport Infrastructure Grants had been distributed among National Plan of Integrated Airport Systems airports in all 50 states (FAA, 2024b), along with close to $3 billion in competitive Airport Terminal Program grants (FAA, 2024c) and close to $60 million in Contract Tower grants (FAA, 2024d). The BIL also expanded eligibility for the Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to include airport-related projects. Recipients could borrow funds for as much as 33% of total eligible project costs at low interest rates. For example, Sacramento International Airport was pursuing a $32 million TIFIA loan to finance the construction of a $140 million pedestrian walkway connecting Terminal B to Concourse B. The Sacramento County Department of Airports noted they expected to save “nearly $27 million over 30 years” relative to traditional financing methods (Sacramento County Department of Airports, 2024).

Still, the airport industry had estimated a need for $151 billion over the next 5 years, averaging $30 billion annually (CBO, 2022). Federal funding programs played a crucial role, particularly for smaller airports, but each program had differing restrictions on how the funds could be allocated. Airports of all sizes were bound by FAA grant assurances, which required airports to be financially self-sustaining, meaning they could not receive tax revenue from their jurisdictions.

Commercial airports had ways to raise their own funding, and those monies could be spent on a wider variety of projects. Funding streams came from both aeronautical operating revenue (such as landing fees and terminal rentals) and non-aeronautical operating revenue (such as parking and facility leases inside the terminal), as well as other sources. Commercial airports could also collect enplanement fees, called Passenger Facility Charges (PFCs); the cap of $4.50 per passenger had not increased since 2001, so revenue per passenger had not kept pace with inflation. Large- and medium-hub airports that chose to collect PFCs had to forgo a large portion of their AIP entitlements, and a large portion of foregone entitlements were transferred to the Small Airport Fund to support small-hub, non-hub, nonprimary, and GA airports (Miller et al., 2020).

Bond markets also allowed larger airports to borrow against future revenue streams to finance large projects. Four different types of bonds were generally used to finance airport projects: general airport revenue bonds, PFC bonds, general obligation bonds, and special facility bonds.

Nearly all airports utilized municipal (tax-exempt) bonds, although rare exceptions occurred (Miller et al., 2020). Smaller airports were more likely to borrow directly from commercial banks.

Airports had also begun to experiment with new sources of funding. The FAA’s Airport Investment Partnership Program, a public–private partnership (P3) program for airport-wide operations, had been used only on a very limited scale by 2023 (FAA, 2023g). However, P3s had been used for several successful terminal redevelopment projects, such as Terminal A at Boston Logan International Airport (BOS) and JetBlue’s T5 at John F. Kennedy International Airport (JFK). The largest airport P3 is LaGuardia’s Central Terminal, which opened in July 2022. It is valued at $4 billion, and a private consortium operates and maintains the facility (The Port Authority of New York and New Jersey, 2022). P3s had their challenges. State laws and other local regulations limited certain project delivery methods (such as P3s or design-build) for public projects in some jurisdictions (Design-Build Institute of America, 2021). Airports had also encountered problems with P3s that were serious enough to terminate the agreement (Shaw, 2019).

In addition, airports had been experimenting with new partnerships and revenue streams, having learned from the emergence of TNCs the importance of developing new charges for using their facilities. However, not all were as successful as originally envisioned. For instance, a deal between Pittsburgh International Airport (PIT) and a gas company to drill on airport land produced a substantial upfront payment, but royalties were not as high as estimated (Allegheny Institute for Public Policy, 2022).

Initial Steps to 2030

Multimodal Integration

As noted earlier, passenger demand had rebounded during this time from the sharp drop in 2020 because of COVID-19. Population growth in smaller metro areas and non-metro areas led to growth in demand at smaller airports. While this period did not see much change in how people accessed airports, in the late 2020s, advances in data availability had allowed a private firm to begin offering a multimodal booking service. The goal was that by using this application or app, passengers would be able to book and pay for multiple segments and modes of a door-to-door trip, regardless of the provider. While the firm started in one origin city to test the concept (meaning that users could book transportation to the airport along with a flight), the response was so positive that the service began expanding to several cities.

Development of AAM technologies continued. The groundwork for AAM had been laid by a variety of startup companies, who continued their work in developing and testing eVTOL aircraft, including uncrewed aircraft. Parallel developments also took place—the FAA was revamping its certification standards to directly address these new aircraft types, and a few smaller airports built vertiports to accommodate eVTOL aircraft in anticipation of new service. The nascent industry was also fortunate not to experience any major crashes during the increasingly frequent test flights, although public opinion was still out on whether the new aircraft would be noisy, disruptive, or serve only wealthy passengers. The ultimate impact of AAM on airports remained unclear.

Funding and Regulatory Issues

At the same time, the FAA entered a new phase of rulemaking, with an eye toward making the process more efficient and responsive. A new “pre-review” process allowed draft rules to be shared

with the industry at an earlier stage. This process shortened the overall time from introduction to adoption because stakeholders could weigh in earlier in the rulemaking process and thus avoid situations in which the publication of the draft rule was followed by a lengthy comment and revision process. It was one such pre-review process that allowed for the certification of the first commercial eVTOL aircraft.

The 2020s saw a mix of challenges and opportunities for airport finances. As noted in Chapter 2: Operations, changes in the baggage handling model created new concerns about airports’ ability to earn revenues from passengers waiting for flights. Other policy changes left airports with more funding flexibility. Changes in AIP grant assurances provided airports with more flexibility regarding the use of AIP funds. In response to stakeholder advocacy efforts, Congress passed a law in the mid-2020s allowing departments of transportation (DOTs) to take a more flexible approach to funding multimodal transportation, including setting aside funds to be specifically targeted at connecting transit systems to airports. This provided a dedicated funding source for projects that were previously complex to fund because of limitations on spending airport revenues off-airport.

Airports continued to apply for BIL grants until the program formally ended in FY26, and awarded funds needed to be obligated by the end of FY 2030. Airports of all sizes used these grants to renovate air traffic control towers, make facilities more accessible to travelers with disabilities, add gates and upgrade terminals, and increase their energy efficiency (FAA, 2024a). Eligibility for TIFIA loans continued, and program uptake increased as airports became increasingly familiar with the process.

Airports also began to pursue other innovative funding arrangements. The 2020s saw an increased use of long-term leases of terminals to private entities—both airlines and third-party operators—as a method for funding the renovation of outdated terminals. This was particularly common among airports that saw a decrease in usage emerging from the COVID-19 pandemic. Some privately owned terminals showed significant creativity in exploring revenue from alternative uses of the space, renting out renovated space during off-hours for activities ranging from religious services to late-night musical events. These were complicated by logistics issues, such as navigating compliance with security requirements, as well as political ones, such as not wanting to appear as favoring some groups over others. A comedy session hosted in a leased airport terminal as part of a community fundraising event had its tongue-in-cheek airport humor go viral, raising further interest in alternative use possibilities for airport space. It remained unclear at the time whether such activities would remain one-off events or become a more consistent source of revenue.

On the regulatory front, lessons learned from the COVID-19 pandemic suggested that incorporating reasonable flexibilities is also important, such as FAA’s “waiver of the minimum usage requirement” for “slots” at JFK, LGA, and Ronald Reagan Washington National Airport (DCA) “due to post-pandemic effects on Air Traffic Controller (ATC) staffing” (FAA, 2023f).

2030–2040

Multimodal Integration

As demand continued to grow, capacity constraints remained a concern at many airports. This prompted some airports and airlines to strengthen their ties with ground transportation providers, particularly with bus operators. Some collaborations took the form of long-term

contracts with private bus operators to move passengers during multi-day disruptions, when passengers could be moved by ground and not air. A few airlines began moving scheduled passengers traveling short-haul routes on buses for cost-efficiency purposes and to optimize fleet utilization. This enabled them to serve markets that were not feasible to serve by air, generally smaller cities within a 90-minute drive. This was greatly helped by changes in TSA regulations to allow off-site screening procedures at bus pick-up locations, as noted in Chapter 2: Operations.

Another development that supported multimodal transportation was the increase in data sharing between airports, airlines, and ground transportation providers. Data protocols and privacy requirements had to be hammered out, and responses to data breaches needed to be developed. Federal agencies helped develop safety protocols that allowed for the development of security data-sharing practices. This digital infrastructure allowed passengers to get a better handle on their expected overall trip length through booking apps. They could even have a car waiting for them when they reached their destination airport because the TNC had real-time information on when the flight would land and how long it would take the passenger to traverse the airport. This growth in multimodal integration was greatly assisted by changes to FAA grant assurances, which allowed airports to use airport-generated revenues for these partnerships.

The expense of passenger AAM flights meant that service generally competed with private GA flights taken by corporations and wealthy travelers. Safety was an initial concern, but by 2040, AAM had established a safety record sufficient to minimize such concerns. However, the passenger market for AAM did not grow substantially, except for feeder services connecting small airports with vertiports—or new stand-alone vertiports, unconnected with existing airports—to larger airports.

In the cargo realm, however, there was a stronger case for AAM. With a continuing pilot shortage, cargo airlines were faster to adopt uncrewed flights, at least for shorter domestic flights. It was easier to shift cargo than passengers to uncrewed flights, partly because no in-flight services were needed, and there was no concern about passengers’ perceptions of safety. Costs also declined rapidly.

Funding and Regulatory Issues

The past revisions to grant assurances, along with increased DOT investment in multimodal transportation, provided demonstrated operational benefits and efficiencies. DOT loosened some restrictions on how federal transportation funding could be used to support multimodal projects. While revenue diversion was still prohibited, the definition of airport-related projects was broadened, particularly when projects support multimodal connectivity.

Parking revenue was gradually declining as passengers increasingly began using AVs, new transit options, and buses. However, airports were able to mitigate this impact through new sources of multimodal revenue, including revenue from bus and TNC partnerships. Reform of the PFC in the early 2030s, which indexed the charge to inflation, also helped stabilize airport revenues. With sweeping changes affecting all transportation modes, professional associations began discussions about more funding flexibility to make it easier to build multimodal projects.

The privatization of airport terminals explored in the 2020s proved to be more than a passing fad. By the late 2030s, it had become common for most U.S. airports to have at least one P3-funded terminal. In many cases, these terminals included facilities for activities that were not directly related to air travel.

2040–2050

Multimodal Integration

By the 2040s, many airports were more than gateways for air travel only. Some dubbed themselves “multiports,” because they functioned as multimodal hubs, deeply integrated into the broader intercity transportation network (Le Bris et al., 2023). Airlines signed an increasing number of interlink agreements to allow code-sharing and expanded their alliances with intercity railway service providers. This was partly because of the lower per-capita GHG emissions for trips under 700 miles (Miller, 2021), and partly because of passenger demand to book multimodal trips under a single ticket. Several new rail connections (both intercity and metro area) to major airports have been built, and by 2050, almost two-thirds of enplanements took place at airports with rail connections.

In addition, passengers could choose between several apps that book multimodal door-to-door trips, and most of them work with all major airlines. Some of the apps even offer concierge services (for a higher fee) that provide more personalized services, such as finding a preferred hotel when disruptions occur.

In this decade, transit finally overtook personal vehicles and TNCs as the most-used mode of transportation for ground transportation to some airports. The large- and medium-hub airports with existing metro-area rail connections worked with those transit operators to increase service frequency. Some even run service 24 hours, if the airport is open around the clock, to accommodate overnight shift work and flight delays. At airports without rail, airport operators begin working with bus operators to provide more frequent service, which decreased the proportion of employees and passengers who arrived by single-occupant vehicle.

By this time, AAM was established as a mode for connecting individuals with the national airport system. Many airports now have some form of regular engagement with AAM on airport property. AAM services focused on inter-city and regional mobility and thus were more disruptive at airports serving regional travelers than airports that focused on long-haul services. AAM generally competed with regional private flights and luxury TNC services rather than public transit options. In some locations, AAM services became a new way to support the Essential Air Service (EAS) program, although subsidies remained in place to ensure service on unprofitable routes. Like other modes of transportation, AAM services were available through multimodal booking apps.

By the beginning of the 2040s, most air cargo traveled on uncrewed aircraft, which brought operational implications for cargo-oriented airports and the interface between air and ground transportation of cargo. There was increased interest in using GA airports as a base of operations for cargo AAM providing medium-haul shipping services.

Funding and Regulatory Issues

Another major change in the early 2040s was the adoption of truly multimodal transportation funding. While some surface multimodal funding had previously existed, the new bill allowed for great flexibility in funding to support a variety of air and surface transportation projects and gave more authority to state and local decision-makers to use funding as they saw fit. Along with this, changes to FAA grant assurances allowed airports to work even more closely

with ground transportation providers and jointly fund projects that met a broader definition of “airport-related.” In addition, the authorization unlocked additional funding through a new round of BIL funding.

The rise of new modes and technologies created opportunities for new revenue streams. Airports levied fees on AAM flights and charged buses and AVs based on their curbside utilization. Additionally, airports continued to look toward unconventional, non-aeronautical revenue generation through, for instance, real-estate development such as commercial, industrial, and hospitality (office buildings, retailers, convention centers, etc.). The increasingly diverse role of airports necessitated increased coordination between federal, state, and local governments, as well as community and industry groups. Finally, new special-purpose funds, some of them temporary, supported clean energy investments on both the landside and airside.

Continuing Challenges

As this reimagining of the national network of airports unfolds, some thorny issues regarding connectivity remained unresolved. Discussions on complex topics such as the consolidation of underutilized aviation facilities continued without consensus. Similarly, some stakeholders advocated for reforming the EAS program to instead focus less prescriptively on multi-model transit options for connecting rural communities with the national airport system. Others argued such proposals were offensive and unfair to rural communities.

In 2050, airports’ revenues are as diverse as ever, and airport finances were generally considered sustainable and financially sound. However, airport finances are also more complex than ever, with funds continuing to come from a wide variety of sources, each with different rules and requirements. Tensions about blurred lines dividing aviation and non-aviation purposes for funds continue. Disagreements about whether certain investments constitute appropriate use of funds continue to occasionally end up being resolved through the court system, particularly in cases that involve funds drawn from user fees or airport involvement in off-airport investments.