The federal government has played a very important role in financing airports. He did it in two different ways. First, through the Airport Improvement Program (AIP) and discretionary grants funded by international departures, cargo, jet fuel and waybills. Second, the financing occurs through the exemption of airports from paying federal tax on interest income for entities holding airport bonds. Likewise, funds are usually generated from the Passenger Facility Charge (PFC) program. This is usually under the administration of the FAA. Local funds generated by this program provide improvements at airports (Federal Aviation Administration, 2010). Despite the fact that most airports' capital investments are currently financed by airports' cash reserves, commercial loans, debt capital raised through municipal bonds, as well as grants from federal and state governments, the sale of exempt bonds Federal taxes and grants provided through the AIP program are the primary funders of major capital projects within airports (Federal Aviation Administration, 2010).Airport Improvement Program (AIP)The Airport Improvement Program (AIP) ensures that subsidies are provided to public airports. In some cases the grant covers private entities. The funding is primarily to ensure that there are significant developments at airports used by the public. Since 1980, numerous airports have achieved significant developments. The capital developments were made possible thanks to funding increases made by the federal government. This happens through grants. Grants are usually given through the Airport Im...... middle of paper ...... by piston-powered propeller planes (Avgas). They also collect a tax of 21.8 cents for every gallon used in jet fuel. The tax goes directly to the Airway Trust Fund and the airport, with a tenth of a cent, is subjected to environmental protection and cleanup programs (Wells, 1992). Works Cited by the Federal Aviation Administration. (2011). Airport Improvement Program (AIP); Funding for airport planning and development. http://www.faa.gov/airports/aip/. RatedSeptember 1, 2011Federal Aviation Administration. (2010). what is AIP? http://www.faa.gov/airports/aip/overview/. Rating September 1, 2011Horonjeff, R., & McKelvey, F. (1983). Airport planning and design. New York: McGraw-Hill Book Company.Wells, A. T. (1992). Airport planning and management. Blue Ridge Summit, PA: Tab Books.