Congressman calls on FAA to suspend airport bailout payments until funding formula is changed

Smaller airports set to receive disproportionately high funding say they didn’t ask for it

Windfall: Reaction

(InvestigateTV) – Airport managers across the country were shocked when they saw how much money each would be getting through a coronavirus bailout package.

Many immediately looked at their neighboring airports and wondered what happened. They all had submitted paperwork that could qualify them for relief through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but the amounts they got back seemed strange in some cases.

Small airports with no major carrier commercial flights and only a few thousand passengers are set to receive millions of dollars. Yet the larger airports in their regions with airlines such as Delta, American and United flying hundreds of thousands of passengers – are slated for far less.

Everyone at this point agrees the varying disbursements came down to the federally-approved Federal Aviation Administration funding formula and the way it was implemented. But there is disagreement about whether the allocations should stand.

Congressman Steve Cohen, a Democrat from Tennessee, said the funding should not go out yet, calling the formula that caused the disparities “flawed.” He said the Senate wrote the formula in a way that favored small airports, some to the tune of $17 million or more.

“There were lots of inequalities and lots of windfalls,” Cohen said.

In a letter to the FAA, Cohen asked the agency to stop the funding and cited InvestigateTV’s report earlier in April that illustrated differences between some airports’ planned CARES funding – some airports are set to receive the equivalent of decades worth of funding, others just a few months.

A little airport gets a big surprise

Working waterfronts and the type of scenery you picture when you think of coastal Maine dot the shores of Penobscot Bay. If you wanted to get there, you’d likely fly into Portland or Bangor.

But another option is to take a charter flight or one of the three daily flights from Boston on a nine-passenger commercial plane and land at the Knox County Regional Airport.

Like all airports, the coronavirus outbreak has affected the small county airport’s finances. Seventy-five employees work at the facility, but the restaurant is closed, and few rental cars are being checked out.

Money is tight, but the airport is required to stay open. The manager, Jeremy Shaw, said its commercial airline still must fly three flights a day, even if they’re empty, to meet Essential Air Service program requirements.

So like many airport managers, Shaw said he sent in the CARES funding paperwork to get four years of operational funding to help keep his airport going. It would have been a little more than $2 million.

He hoped for enough to pay the bills and employees with that amount of money.

What he got was $17.9 million in funding allocations.

“I think everyone is aware how surprised we are,” Shaw said.

Not only was it more money than expected, it was more than the amounts allocated to nearby airports with major airlines and far more passengers.

The Bangor airport is expecting $4.1 million and has around 336,000 passengers fly out each year. The Portland airport, with more than 1 million annual passengers, got $12.1 million.

“[The amount] will provide needed short term relief equal to roughly six months of operating expenses. The funding is appropriate, helpful, and will meet the short term financial constraints imposed on the Portland International Jetport due to this health crisis,” Portland’s airport director Paul Bradbury told InvestigateTV in an email.

Knox County was allocated enough money to cover the equivalent of nearly 35 years of operating costs. The airport logged around 17,000 passengers leaving the airport in 2018, which is the year used in FAA CARES funding calculations.

That amount represents more than $1,000 for every passenger compared to about $12 per passenger at the Bangor airport.

The Knox County Regional Airport (RKD) is set to receive more money than two other, larger nearby Maine airports (Portland and Bangor). Comparisons use FAA data from 2018, which is the data used to determine funding allocations.
The Knox County Regional Airport (RKD) is set to receive more money than two other, larger nearby Maine airports (Portland and Bangor). Comparisons use FAA data from 2018, which is the data used to determine funding allocations. (Source: Illustration: Jamie Grey)

The big difference, and why that airport likely got so much money, was it reported zero debt that year. The way the formula works, according to experts and Cohen, is it favors airports with comparatively low or no debt.

“It came in that if you didn’t have any debt, you got basically $18 million give or take, $17.6 million off the top,” Rep. Cohen said. “They did the formulary to where it would benefit small airports that didn’t have many passengers.”

The FAA’s formula incorporated three factors from 2018 records: The number of passengers who flew out, the airport’s debt, and how that number compared to cash reserves.

The House, Cohen explained, wanted the funding to be based only on passenger numbers, but the Senate wanted to incorporate debt as a measure.

“This was not right. But politics sometimes isn’t right. It’s infuriating to me because it’s not rational, it’s not logical,” Cohen said. “At the same time, I see where it came from. The House fought the Senate, but the Senate won.”

For some two dozen airports such as the one in Knox County, the FAA will initially award approximately four years’ worth of operating expenses. Then, the airport can apply to get the rest and use it on capital improvement projects, which is something critics like Cohen disagree with.

“The purpose should be entirely to help airports that have lost revenue to the coronavirus. Passenger decreases that result in less collection of taxes, passenger fees that airports rely on. Folks that have kiosks or stores in the airports … employees that were laid off,” Cohen said.

No matter how the money is parsed out, each airport has four years to spend the money on operating expenses and is encouraged to "spend funds expeditiously" for other FAA-allowed expenses.

Explore the map below to see how much money is set to go to airports allocated more than $500,000 of CARES Act funding. The size of the circles represents the amount of funding when compared to the number of passengers who boarded planes in 2018, which is the number that accounts for the largest portion of the funding calculation. Click on circles for more information on each airport.

Data Sources: FAA, Airport Financial Documents, and Sixel Consulting Group. Data Visualization: Jamie Grey.

Washington airport plans to use millions on terminal

In Pullman, Washington, the airport’s allocation is $18.1 million. It’s the equivalent of 22 years of its operating expenses.

Across the border in Idaho, the airport in Lewiston is on deck for a $1.2 million distribution, the equivalent of 1.6 years.

Lewiston’s airport board chairman, Gary Peters, told InvestigateTV he was disappointed, and it would be tough to compete.

“It just needs to be a level playing field. That was the whole point behind the CARES Act, if I understand it correctly, was to allow airports to remain healthy and fund their operations,” Peters said.

Both of these airports operate flights out of the relatively isolated region that’s home to two Division I universities. The difference in passengers departing each airport was about 10,000, or an 8.7% difference, in 2018.

Tony Bean, the manager of the Pullman-Moscow Regional Airport, said he was surprised by their allocation but has capital improvement projects already planned that align with the way FAA funding can be used.

“We get an announcement that says, ‘You’re getting announced for a CARES grant funding of $18 million.’ And then you’re going, okay, well, how is that possible, first of all? The next question is can you spend it? What can you do with it?” Bean said.

The plan in Pullman is to request and use money beyond the initial allotment toward a $40-50 million terminal project currently in the design phase. The airport recently completed a $154 million required runway project partially using community-supported funding.

Bean said it’s problematic to compare airports against one another because they all operate differently and have different practical accessibility for funding means such as bonds.

“There’s a saying in the airport industry that if you’ve seen one airport, you’ve seen one airport.”

In his case, Bean said the cities of Pullman and Moscow’s community partners have invested heavily and the CARES money will be used for important projects.

“I can’t speak to how somebody else operates their airport. It’s an individual case-by-case basis, and again, we didn’t come up with the formula,” Bean said.

The exact formulas used remain somewhat secret. Airport managers themselves are not completely sure what happened, and the FAA has not responded to InvestigateTV’s numerous requests for comments and explanations.

What is known from limited FAA documentation and industry experts is the formulas were applied across the entire country using the same data sets from the same year – it just benefited some airports more than others.

On that point, Bean said the allocations are about Congress, not airport management and equity.

“I don’t think it has anything to do with fair. It has to do with Congressional authorization put together a match formula, and it got pushed through the FAA,” Bean said. “I didn’t go ask for this. We didn’t lobby for it. We didn’t say that you should make the formula X, Y or Z. We had no input into this.”

Moving Forward

Rep. Cohen plans to keep pushing for a reformulation to distribute the money in ways that more closely relate dollars to passenger counts and day-to-day expenses.

“I don’t think any of these airports should have gotten even equal their operating expenses, let alone four times. Because the major airports by far did not,” Cohen said.

Cohen is pessimistic about getting the Senate to make changes that would pull favor from small airports.

For the airports, they are waiting to see what happens and when they’ll start receiving money to help stay afloat as passenger numbers remain detrimentally low.

Some airports, like the Pullman-Moscow Airport in eastern Washington, are optimistic the money will come through – all of it.

Bean said he believes they will get the money because they have a plan to spend it that aligns with the FAA’s descriptions of how money can be used: “There’s a definite place to put that funding.”

In Maine, the Knox County airport isn’t banking on getting in the ballpark of $18 million but hopes to get its operations costs accounted for.

“The rest of it is kind of magic money we’re not sure we can access it or not,” said Shaw, the airport manager. “We’re not planning on it, but we know we have our expenses covered for.”

For now, he said he is focused on daily work: “It’s been a roller coaster since it came out. We’re done worrying about it… Even the access to the $2 million [for operations] in beneficial for us.”

The nearby Bangor airport, which is set to receive $4 million, said it is just happy to get help.

“We are grateful for the assistance and appreciative of the support and efforts from Maine’s Congressional Delegation. This funding will help keep our airport operating and keep our airport personnel employed,” airport director Tony Caruso wrote in an email to InvestigateTV. “We know this is a difficult time for many industries and it’s going to take all of us working together to move forward.”

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