Incentivize It and They Will Come? How Some of the Busiest U.S. Airports Are Building Air Service With Incentive Programs

Problem, research strategy, and findings: In the 1990s, the Federal Aviation Administration (FAA) prohibited airport sponsors (local authorities managing airports) from diverting airport revenue to general municipal budgets and allowed the busiest airports to create air service incentive programs (ASIPs) to induce airlines to launch new air service. These incentive programs have not been evaluated, although planners need information on their long-term effectiveness. Few data, however, are available on ASIP programs; I created a database to identify which airports have ASIPs, which new airline services received incentives, and the services that continued after incentives ended. I find that 26 of 44 airports with ASIPs that recruited new routes spent $171.5 million combined between 2012 and the first quarter of 2015, 40% on routes that were not retained when the incentive ended. The busiest airports in the largest cities with growing populations, relatively independent of local economic status, were most able to recruit and retain new airline services. Small and medium airports, particularly in stagnant areas, were not able to recruit and retain new air services.Takeaway for practice: The FAA should require airport sponsors to submit comprehensive information on their ASIP programs—the routes recruited and retained, as well as detailed estimates of the costs and benefits of each route—to provide planners with needed information. The FAA also should loosen the constraints on the use of non-aeronautical airport revenues so that communities can choose between spending on incentives to increase air service and other programs to increase local economic development.