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.