Building a Sustainable Revenue Base
The financial reality for most small GA airports is straightforward: revenue comes from a small number of sources, expenses are relatively fixed, and there is little margin for waste. The airports that achieve financial stability do so by being deliberate about pricing, disciplined about cost control, and strategic about capital investment.
Primary Revenue Sources
For a typical non-Part 139 GA airport, revenue comes from a combination of the following:
- Hangar lease and tie-down fees. This is the largest revenue source for most small airports. T-hangar rents, box hangar leases, ground leases for privately-built hangars, and tie-down fees for transient and based aircraft all contribute. As discussed in Chapter 4, rates should reflect fair market value and include escalation provisions.
- Fuel sales or flowage fees. If the airport sells fuel directly, gross fuel sales minus cost of goods is a significant revenue line. If an FBO sells fuel, the airport typically collects a per-gallon flowage fee. Either way, fuel volume is closely tied to airport activity and the competitiveness of your fuel pricing relative to nearby fields.
- Land leases. Aeronautical and compatible non-aeronautical land leases provide revenue from airport property not currently needed for airfield operations. Cell tower leases, agricultural leases, and leases for aviation-compatible commercial uses are common examples.
- Landing fees and ramp fees. Some airports charge landing fees for transient aircraft or ramp fees for parking. These are less common at small GA fields but can generate meaningful revenue at airports with significant transient traffic.
- Miscellaneous revenue. Vending machines, aircraft washing facilities, hangar waiting list deposits, event hosting fees, and other incidental sources contribute small amounts that add up over time.
Diversify your revenue sources where possible. An airport that depends entirely on hangar rents from 30 T-hangars is vulnerable to vacancy fluctuations. Adding fuel sales, ground leases, and compatible non-aeronautical revenue creates a more resilient financial base.
Revenue Protection
Generating revenue is only half the equation. You also need to collect it consistently and protect it from diversion. Three practices make the biggest difference:
- Timely invoicing and payment tracking. Late invoices lead to late payments. Automated recurring billing eliminates the delay between when rent is due and when an invoice goes out. Tracking aged receivables lets you identify and address delinquencies before they become write-offs.
- Separate airport accounts. Airport revenue should flow into a dedicated airport fund, not a general government account. This is both a compliance requirement (Grant Assurance 25) and a best practice for financial transparency.
- Regular rate reviews. Review your lease rates, fuel pricing, and fee schedule at least annually. Compare them against regional benchmarks and adjust as warranted. Rates that drift below market over time represent lost revenue that compounds year after year.
Hangarly automates recurring invoicing tied to your lease terms, tracks payment status in real time, and generates aging reports so you always know where your receivables stand. Tenants can pay online via credit card or bank transfer, reducing collection delays. See the billing features.
Airport Improvement Program (AIP) Funding
The Airport Improvement Program is the primary federal funding mechanism for airport development at public-use airports in the NPIAS. Understanding how AIP works is essential for any airport manager planning capital improvements.
How AIP Funding Works
AIP funding comes from the Airport and Airway Trust Fund, which is financed primarily by aviation fuel taxes and passenger ticket taxes. Congress authorizes AIP spending levels through periodic FAA reauthorization legislation. The FAA Reauthorization Act of 2024 (Public Law 118-63) authorized AIP at $3.35 billion for fiscal year 2024, increasing to $4 billion annually for FY 2025 through FY 2028.
AIP funds are distributed through two mechanisms: entitlements and discretionary grants. Non-primary airports in the NPIAS receive a minimum annual entitlement of $150,000, provided the airport sponsor has submitted an acceptable capital improvement plan. Beyond entitlements, airports can compete for discretionary AIP funds for larger projects, though discretionary awards are less predictable and depend on national priority rankings.
Federal Share
For non-primary airports, the federal share of eligible AIP project costs is typically 90 percent, with the airport sponsor responsible for the remaining 10 percent local match. Some projects at airports in designated areas may qualify for a higher federal share. The local match can come from the sponsor's own funds, state grants, or other non-federal sources.
Eligible Projects
AIP funding is limited to specific categories of airport development. Common eligible projects for small GA airports include:
- Runway and taxiway construction, reconstruction, and rehabilitation
- Airfield lighting, signage, and marking improvements
- Obstruction removal and mitigation
- Land acquisition for runway protection zones and approaches
- Airport master plans and airport layout plans
- Wildlife hazard assessments and management plans
- Environmental studies required for airport development
- Safety and security equipment
Notably, AIP funds generally cannot be used for hangar construction, terminal buildings, parking lots, or revenue-producing improvements. These must be funded through airport revenue, state grants, local bonds, or private investment.
AIP eligibility requires an approved Airport Layout Plan (ALP). If your ALP is outdated or nonexistent, updating or creating one should be a priority — it is both an AIP prerequisite and a foundational planning document for your airport. ALP development itself is an AIP-eligible expense.
The Application Process
AIP projects begin with inclusion in your airport's Capital Improvement Plan (CIP), which is submitted to the FAA through your Regional Airports Division. The CIP identifies projects planned for the next several years, ranked by priority. Your FAA program manager works with you to determine which projects are eligible, how they should be phased, and when funding is likely to be available.
Start the conversation with your FAA program manager well in advance of when you need the funding. AIP projects require environmental review, design, and bidding processes that can take one to three years from initial planning to construction. Waiting until a runway is failing to begin the process means years of deteriorating conditions before work can begin.
State and Local Funding
Many states administer their own aviation grant programs that can supplement AIP funding or cover projects that AIP does not. These programs vary significantly from state to state in terms of funding levels, eligible projects, and application processes.
Common state-funded project types include hangar construction, terminal and pilot lounge improvements, fuel system upgrades, access road improvements, and other projects that support airport revenue development but fall outside AIP eligibility. Some states also provide matching funds for the local share of AIP projects, effectively reducing the sponsor's out-of-pocket cost.
Contact your state aeronautics agency to understand what programs are available, their application cycles, and any planning requirements. Many state programs require a current airport master plan or capital improvement plan as a condition of eligibility.
Capital Improvement Planning
A disciplined approach to capital improvement planning is what separates airports that maintain and grow their infrastructure from those that fall into a cycle of deferred maintenance and emergency repairs.
Building Your CIP
Your Capital Improvement Plan should identify all planned projects over a five- to ten-year horizon, organized by priority and funding source. For each project, include an estimated cost, the proposed funding mix (AIP, state, local, revenue), the estimated timeline, and a brief justification explaining why the project is needed.
Prioritize projects based on safety impact first, then compliance requirements, then operational efficiency, and finally capacity expansion. A runway rehabilitation that addresses safety deficiencies should always rank above a new hangar project, even if the hangar would generate more revenue.
Funding Your Local Match
Even with a 90 percent federal share, the 10 percent local match on a $1.5 million runway project is $150,000 — a significant amount for a small airport budget. Plan for local match requirements well in advance:
- Build a capital reserve fund. Set aside a portion of annual revenue specifically for capital project matching. Even small monthly contributions add up over time.
- Explore state match assistance. Some states will fund part or all of the local match requirement for AIP projects.
- Consider phasing. Large projects can sometimes be broken into phases that are more manageable from a local match perspective.
Financial Reporting and Transparency
Whether your airport is managed by a city, county, or independent authority, financial transparency builds trust with your governing body and your community. Prepare regular financial reports that show revenue by source, expenses by category, outstanding receivables, and capital reserve balances. Compare actual performance against your budget and explain significant variances.
Financial reporting also supports your compliance obligations. Grant Assurance 25 requires that airport revenue be used for airport purposes — having clear, auditable financial records makes it straightforward to demonstrate that you are meeting this requirement.
The next chapter covers airport planning and capital development — how to think strategically about your airport's future and protect it from the threats that can undermine its long-term viability.