Passenger facility charge vs. airport improvement program funds: A dynamic network DEA analysis for U.S. airport financing

• We develop dynamic network DEA models to investigate PFC-for-AIP funds substitution.
• U.S. airports can substitute PFC for 8–35% of the current AIP funds.
• The substitution contributes significantly to the Congress’ plan to cut AIP funding.
• The amount of substitution negatively correlates with airport efficiency.

Passenger Facility Charge (PFC) and the Airport Improvement Program (AIP) are two major sources to finance U.S. airports. This paper develops a novel dynamic network DEA framework to investigate the substitutability between PFC and AIP funds. We find that the studied U.S. airports can substitute PFC for 8–35% of the current AIP funds and contribute significantly to the proposed plan of the US congress to cut AIP funding. In addition, the amount of PFC-for-AIP funds substitution negatively correlates with the productive efficiency of airports. The findings send an important message for future policy reforms on U.S. airport financing.