[Federal Register Volume 88, Number 234 (Thursday, December 7, 2023)]
[Notices]
[Pages 85344-85357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26809]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. FAA-2022-1204]


FAA Policy Regarding Air Carrier Incentive Program

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final policy statement.

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SUMMARY: This policy statement updates FAA policy regarding incentives 
offered by airport sponsors to air carriers for improved air service. 
It is longstanding practice for airport operators to offer incentives 
to air carriers to promote new air service at an airport, including 
both new air carriers serving the airport and new destinations served. 
The updated policy statement supersedes the 2010 Air Carrier Incentive 
Program Guidebook. The policy statement includes general principles to 
assess whether an airport sponsor's air carrier incentive program 
(ACIP) complies with the sponsor's FAA grant assurances. It also 
includes guidance on the permissibility of various specific aspects of 
an ACIP, as well as ACIP implementation.

DATES: This final policy statement is effective December 7, 2023.

ADDRESSES: For information on where to obtain copies of documents and 
other information related to this policy statement, see ``How To Obtain 
Additional Information'' in the SUPPLEMENTARY INFORMATION section of 
this document.

FOR FURTHER INFORMATION CONTACT: Kevin C. Willis, Director, Office of 
Airport Compliance and Management Analysis, ACO, Federal Aviation 
Administration, 800 Independence Avenue SW, Washington, DC 20591, 
telephone (202) 267-3085; facsimile: (202) 267-4629.

SUPPLEMENTARY INFORMATION: Airports obligated under the terms of an 
Airport Improvement Program (AIP) grant agreement include virtually all 
commercial airports in the United States. At each of these airports, 
the airport sponsor must ensure that an air carrier incentive program 
(ACIP) is consistent with the sponsor's FAA grant agreements, including 
standard Grant Assurances relating to economic discrimination, 
reasonable fees, and use of airport revenue. In the 1999 Policy and 
Procedures Regarding the Use of Airport Revenue, the FAA provided that 
certain costs of activities promoting new air service and competition 
at an airport are permissible as a tool for commercial airports to 
establish or retain scheduled air service. In the 2010 Air Carrier 
Incentive Program Guidebook, the FAA provided more detailed guidance on 
both the use of airport revenue and the temporary reduction or waiver 
of airport fees as an incentive for carriers to begin serving an 
airport or begin service on a route not currently served from the 
airport. A number of U.S. airport sponsors have used ACIPs in recent 
years, and the agency had the opportunity to review many of these 
programs for consistency with the sponsor's grant agreements, Grant 
Assurances, and other Federal obligations. Based on that experience, 
the FAA is publishing its revised agency policy on ACIPs.

I. Authority for the Policy

    This policy is published under the authority described in title 49 
of the United States Code, subtitle VII, part B, chapter 471, section 
47122(a). The policy will not have the force and effect of law and is 
not meant to bind the public in any way, and the publication of this 
policy is intended only to provide information to the public regarding 
existing requirements under the law and agency policies. Mandatory 
terms such as ``must'' in this notice describe established statutory or 
regulatory requirements.

II. Background

A. Overview of Air Carrier Incentive Programs

    Airports and communities of all sizes use air carrier incentives in 
order to attract new air service. Incentives may be offered to new 
entrant carriers to begin service at an airport or to incumbent 
carriers at an airport to add new routes. Incentives may apply to 
international or domestic service.
    ACIPs can be divided into two primary categories: programs funded 
by the airport itself (``airport-sponsored incentives'') and those 
funded by the local community (``community-sponsored incentives''). The 
primary distinction between these two groups relates to the funding 
used for an incentive. For airport-sponsored incentives using airport 
funds, the use of the funds must comply with the requirements of 
Federal law and FAA grant agreements for use of airport revenue. In 
contrast, community-sponsored incentives using non-airport funds may be 
used in a broader set of ways. Community-sponsored incentives have been 
funded by various community groups, including local governments, local 
chambers of commerce and tourism organizations and local businesses. 
Airport-sponsored incentives largely involve a reduction or waiver of 
landing fees and other airport fees. Airport sponsors may also 
contribute to marketing programs, provided the marketing focuses on the 
airport rather than destination marketing. Community-sponsored 
incentives can include more direct financing of routes, including 
minimum revenue guarantees, travel banks, and marketing funding that 
may include destination marketing. Another

[[Page 85345]]

important distinction is the role played by the airport sponsor. The 
sponsor may have a direct management role of the airport-sponsored 
incentive program, or a limited role advising the non-airport entity 
responsible for the community-sponsored incentive program.

B. Federal Obligations

    Airport sponsors that have accepted grants under the AIP have 
agreed to comply with certain Federal requirements included in each AIP 
grant agreement as sponsor assurances. The Airport and Airway 
Improvement Act of 1982 (AAIA) (Pub. L. 97-248), as amended and 
recodified at 49 U.S.C. 47101 et seq., requires that the FAA obtain 
certain assurances from an airport sponsor as a condition of receiving 
an AIP grant. Several of these standard Grant Assurances relate to the 
extent to which an airport sponsor can provide incentives to an air 
carrier in return for new air service at the airport.
    Grant Assurance 22: Economic discrimination: Grant Assurance 22, 
paragraph 22.a. requires the airport sponsor to allow access by 
aeronautical operators and services on reasonable terms and without 
unjust discrimination. Paragraph 22.e. of Grant Assurance 22 further 
requires: ``Each air carrier using such airport . . . shall be subject 
to such nondiscriminatory and substantially comparable rules, 
regulations, conditions, rates, fees, rentals, and other charges with 
respect to facilities directly and substantially related to providing 
air transportation as are applicable to all such air carriers which 
make similar use of such airport and utilize similar facilities, 
subject to reasonable classifications such as tenants or non-tenants 
and signatory carriers and non-signatory carriers.''
    The FAA has determined that a carrier starting new service at an 
airport is temporarily not similarly situated to carriers with 
established route service at the same airport. Accordingly, an airport 
sponsor may offer a waiver or reduction of fees and jointly market new 
service, for a fixed time and within certain limits, without unjustly 
discriminating against carriers not offering new service and not 
participating in the air carrier incentive program.
    Grant Assurance 22 also serves to prohibit an airport sponsor from 
charging carriers and other operators not participating in an incentive 
program for any costs of an air carrier incentive program. Charging 
non-participating operators for the costs of an incentive would be a 
cross-subsidy of the incentive program, and therefore not a reasonable 
fee component for nonparticipating operators.
    The FAA's Policy Regarding Airport Rates and Charges provides 
detailed guidance on the acceptable components of carrier and other 
aeronautical user fees. Any ACIP adopted under this Policy must conform 
to the Policy Regarding Airport Rates and Charges.
    Grant Assurance 24, Fee and Rental Structure: Grant Assurance 24 
generally requires that an airport sponsor maintain an airport rate 
structure that makes the airport as self-sustaining as possible. For 
purposes of planning and implementing an ACIP, the airport sponsor must 
assure that a marketing program to promote increases in air passenger 
service does not adversely affect the airport's self-sustainability and 
the existing resources needed for the operation and maintenance of the 
airport. The Policy Regarding Airport Rates and Charges provides 
further guidance on compliance with Grant Assurance 24.
    Grant Assurance 25, Airport Revenues: Grant Assurance 25, which 
implements 49 U.S.C. 47107(b), generally requires that airport revenues 
be used for the capital and operating costs of the airport or local 
airport system. Title 49 U.S.C. 47133 imposes the same requirement 
directly on obligated airport sponsors. The FAA Policy and Procedures 
Regarding the Use of Airport Revenue (Revenue Use Policy), in section 
V.A.2, provides that expenditures for the promotion of an airport, 
promotion of new air service and competition at the airport, and 
marketing of airport services are legitimate costs of an airport's 
operation. Air carrier operations are not a capital or operating cost 
of an airport; therefore, use of airport revenue for a carrier's 
operations is a prohibited use of airport revenue. Accordingly, while 
an airport sponsor can assume certain marketing costs relating to 
service at the airport, the sponsor may not make payments in any form 
from airport revenue to a carrier for operating at the airport, 
including for providing air service at the airport.

C. Related Federal Programs

    Essential Air Service Program: Following deregulation of the 
airline industry, the Essential Air Service (EAS) program was put into 
place to guarantee that communities that were served by certificated 
air carriers before airline deregulation maintain a minimal level of 
scheduled air service. The United States Department of Transportation 
(Department) implements this program by subsidizing at least a minimum 
of daily flights from each designated EAS community/airport, usually to 
a large- or medium-hub airport, except for within Alaska. As of May 
2023, the Department subsidizes commuter and air carriers, and air 
taxis to serve 61 communities in Alaska and 111 communities in the 48 
contiguous states and Puerto Rico that otherwise would not receive any 
passenger air transportation. Because the EAS program largely involves 
Federal payments to air carriers, the EAS program does not affect the 
responsibilities of an airport. Eleven (11) communities receive 
funding, via grant agreements, through the Alternate Essential Air 
Service (AEAS) program. Those 11 communities obtain their own air 
service, currently all from a commuter air carrier, operating all 
flights as public charters under DOT Part 380 regulations.
    Small Community Air Service Development Program. The Small 
Community Air Service Development Program (SCASDP) is a Federal grant 
program designed to provide financial assistance to small communities 
to help them enhance their air service. The program is managed by the 
Associate Director, Small Community Air Service Development Program, 
under the Office of Aviation Analysis, in the Office of the Secretary 
of Transportation. Grantees must be public entities and can include 
local governments and airport operators. Grant funds may be used for a 
variety of measures to promote air service and are dispersed on a 
reimbursable basis. SCASDP grant funds are not airport revenue and may 
be used for purposes for which airport revenue is prohibited, including 
direct subsidy of air carrier operations.
    Holding a SCASDP grant does not affect an airport sponsor's 
obligations under its AIP grant agreements. The Department's order 
awarding SCASDP grants states that a SCASDP grant does not relieve the 
airport sponsor from the obligation to use airport revenues only for 
purposes permitted by the AIP Grant Assurances and Federal law. 
Accordingly, if airport revenues are used as local match funds for a 
SCASDP grant, those funds remain subject to Grant Assurance 25; 
however, this would not prevent an airport sponsor using airport 
revenue as a local match to SCASDP grants similar to airport revenue 
being used as a local match to AIP grants. This permits airport 
sponsors to pursue reasonable strategies to promote the airport and 
provide incentives to encourage new air service.

[[Page 85346]]

D. The 2010 Air Carrier Incentive Guidebook

    Previous FAA policy on ACIPs was published in the Air Carrier 
Incentive Program Guidebook, issued in September 2010 (and referred to 
below as ``the Guidebook'' or ``the 2010 Guidebook''). While the 
Guidebook served as a useful description of FAA policy on ACIPs, with 
the publication of this policy update, the FAA is grounding the policy 
more in basic principles rather than in a detailed list of prohibited 
practices. The intention is to provide more flexibility for airport 
sponsors to design particular incentive programs while remaining in 
compliance with Federal obligations regarding economic discrimination, 
reasonable fees, and use of airport revenue.

E. FAA Experience With ACIPs

    In the last 20 years, and particularly since the publication of the 
2010 Guidebook, there has been a proliferation of ACIPs. ACIPs have 
been implemented at more than 250 U.S. commercial service airports. 
Some airport sponsors have used ACIPs on occasion or intermittently, 
while others have maintained ACIPs on a recurring and renewable annual 
basis. ACIPs have been used at smaller airports seeking to acquire and 
maintain any level of air carrier service, while sponsors of larger hub 
airports have also used ACIPs to add to existing service patterns. 
While most ACIPs have complied with Federal obligations as outlined in 
the 2010 Guidebook, several practices have raised issues of compliance:
     There have been cases where an airport sponsor has sought 
service from a specific air carrier and tailored its ACIP for that 
purpose, which can present an issue of unjust discrimination.
     While sponsors have avoided direct cash subsidies to 
carriers, some ACIPs have included incentives that could be seen as 
efforts to circumvent the clear prohibition on the use of airport 
revenue for subsidy of carrier operations.
     Sponsors have made direct cash payments to carriers for 
marketing costs under a joint marketing program without appropriate 
documentation.
     Use of a sponsor's community funds for practices such as 
airline subsidies and revenue guarantees for a carrier may be 
inconsistent with the sponsor's Grant Assurances.
     Sponsors have entered into incentive arrangements with a 
carrier with no notice to the public or other carriers of the terms of 
the incentive program. Non-participating carriers may have no means of 
determining whether and how the incentive program affects aeronautical 
fees at the airport.
    In consideration of agency experience with the oversight of ACIPs 
in recent years, the FAA is issuing this restatement of the agency 
policy on ACIPs.

F. Summary of the Notice of Proposed Policy

    The FAA published a proposed policy on ACIPs on February 3, 2023, 
with a request for public comment. The proposed policy articulated five 
general principles to summarize the framework under which an airport 
sponsor can implement an ACIP:
     Discrimination between carriers participating in an ACIP 
and non-participating carriers must be justified and time-limited.
     A sponsor may not use airport revenues to subsidize air 
carriers.
     A sponsor may not cross-charge non-participating carriers 
or other aeronautical users to subsidize ACIP carriers.
     The terms of an ACIP should be made public.
     Use of airport funds for an incentive program must not 
adversely affect the resources needed for operation and maintenance of 
the airport.
    The proposed policy also included a number of updates and 
clarifications, several of which differ from the material in the 2010 
Guidebook. Key provisions in the proposed policy include:
     Revising the definition of new service to comprise ``any 
nonstop service to an airport destination not currently served with 
nonstop service, or any service to an airport by a new entrant 
carrier.'' This proposed definition would modify the definition in 2010 
Guidebook primarily by eliminating increased frequencies from the 
definition of new service, and by clarifying that only nonstop service 
qualifies.
     Allowing incentives for three seasons (up to three years 
from the start of service) for seasonal service, which is defined as 
service offered for less than six months of the year.
     Clarifying that an ACIP may be offered for new cargo 
service, separate from any ACIP offered for new passenger service.
     Clarifying that incentives may be based on the number of 
passengers actually carried or the seat-miles associated with new 
service, as long as they are constructed in a way that avoids unjust 
discrimination and so that the resulting reduction in fees does not 
exceed the amount of the standard fees the carrier receiving the 
incentive would have been charged without the incentive.
     Articulating expectations for ACIP transparency, including 
the disclosure of proposed ACIPs and incentives granted.
     Modifying the 2010 Guidebook's prohibition of airport 
sponsor staff from assisting or advising a non-airport entity on an 
ACIP that used general community funds, and clarifying the 
circumstances and limitations under which an airport sponsor can 
provide technical assistance to non-airport entities.
     Clarifying that payments of marketing and advertising 
costs directly to a carrier under an ACIP will be considered a 
prohibited diversion of airport revenue, and allowing payments of 
airport revenue for marketing only to the entity providing the 
marketing services.
     Modifying the expected process for airports with a limited 
ACIP budget that may limit incentives to a single carrier so that a 
request for proposals (RFP) process is no longer the stated preferred 
way to award the incentive. Instead, the availability of an ACIP, along 
with any limitations, needs to be publicly disclosed at least 30 days 
prior to entering an agreement with a carrier. Another difference from 
the 2010 Guidebook is that the proposed policy in this area does not 
distinguish based on an airport's size.
     Clarifying that airport sponsors have discretion as to 
whether their ACIP applies to an air carrier restarting service that 
was previously subject to an incentive but had been canceled due to 
various reasons.
     Allowing carrier incentives that were initiated prior to 
the issuance date of the new policy to continue until they expire, as 
long as they complied with the FAA's previous policy guidance (with a 
maximum timeframe of two years, consistent with the 2010 Guidebook). 
However, incentives initiated on or after the issuance date of the 
final policy must conform to the guidance in the final policy 
statement.
    The FAA also requested comments on whether incentives for upgauging 
to a larger aircraft type should continue to be allowed consistent with 
the petition partially granted to the Clark County Department of 
Aviation, Nevada, in 2012.
    The proposed policy also addressed several other aspects of ACIPs 
and the ACIP process.
    The FAA invited comments on the proposed ACIP policy for 60 days, 
and the comment period closed on April 4, 2023.

[[Page 85347]]

G. General Overview of Comments

    The FAA received comments from 19 industry stakeholders. Commenters 
included Airlines for America (A4A), the American Association of 
Airport Executives (AAAE), Airports Council International--North 
America (ACI-NA), 15 airport sponsors, and one private company. The 
majority of individual airport sponsor comments represent large hub 
airports; however, the FAA also received several comments from sponsors 
for smaller airports.
    Commenters generally supported the FAA's initiative to update its 
ACIP policy and guidance given the evolution of the aviation industry 
since the publication of the 2010 Guidebook. Most commenters, 
particularly airport stakeholders, supported the FAA's stated goal of 
providing additional flexibility to airport sponsors to design ACIPs 
within the framework of the sponsors' federal obligations, although 
there were differing perspectives on whether the proposed policy 
accomplishes that goal.
    Commenters had suggestions for modifications to several aspects of 
the proposed policy. Some areas of the proposed policy generated 
numerous and/or particularly strong comments, including:
     The definition of new service, particularly the exclusion 
of new frequencies on routes that already have nonstop service;
     Procedures in cases where an ACIP has a limited budget and 
can only be awarded to one carrier;
     Incentives for upgauging, as well as incentives that vary 
based on passengers or seat-miles;
     ACIP transparency expectations;
     Technical assistance for non-airport entities; and
     Whether funds can be paid directly to an air carrier as 
part of a marketing incentive.
    Comments on these and other areas of the proposed policy, as well 
as the FAA's responses and, in some cases, changes to the proposed 
policy, are discussed in greater detail below.

III. Discussion of Public Comments and the Final Policy

    The FAA has made changes to this policy in response to comments 
made by the public. Some of the changes are to terminology to improve 
clarity, while other more substantive changes are in response to 
comments raised by stakeholders. Summaries of the comments and the 
FAA's responses are grouped by category in the following subsections.

A. Policy Approach, ACIP Flexibility and Guiding Principles

    ACI-NA and four individual airport sponsors affirmed their support 
for the FAA's stated goal of providing more flexibility to airport 
sponsors, but commented that they believe the proposed policy did not 
live up to this intention. These commenters recommended that the FAA 
adopt less prescriptive language in order to place fewer limits on 
airport sponsors' ability to design ACIPs. ACI-NA went on to request 
that the FAA clearly state that the final policy has no force of law 
and eliminate any suggestion that airport sponsors must comply with it.
    Tampa International Airport (TPA) requested that the policy 
explicitly reaffirm that certain uses of airport revenue are 
permissible in accordance with the Revenue Use Policy.
    The FAA notes that without a policy that articulates criteria for 
which incentives are allowed, there would be no protected ACIPs, as 
such programs are inherently discriminatory. Grant Assurance 22 
prohibits unjust discrimination and requires substantially comparable 
fees for all air carriers that make similar use of the airport and 
utilize similar facilities (subject to reasonable classifications such 
as tenants or non-tenants and signatory carriers and non-signatory 
carriers). The FAA is providing this policy to guide airports regarding 
the FAA's interpretation of the grant assurances and to avoid unjust 
discrimination.
    For further clarity, and to address TPA's comment, the FAA has 
added a sentence to the second principle in the policy affirmatively 
stating, ``Fee reductions, fee waivers, and marketing assistance as 
incentives to new service are permitted to the extent described in the 
Policy and Procedures Concerning the Use of Airport Revenue.''
    Regarding ACI-NA's comment about the final policy having no force 
of law, the notice of proposed policy contained the following 
statement: ``The policy proposed under this notice will not have the 
force and effect of law and is not meant to bind the public in any way, 
and the notice is intended only to provide information to the public 
regarding existing requirements under the law and agency policies. 
Mandatory terms such as ``must'' in this notice describe established 
statutory or regulatory requirements.'' The FAA has maintained a 
similar statement in the ``Authority for this Policy'' section of this 
final policy statement.

B. Definitions

    New Service: There were numerous comments on the definition of new 
service, particularly focused on whether additional service to existing 
markets should be included as eligible for an ACIP.
    A4A and Rick Husband Amarillo International Airport (AMA) commented 
that the proposed policy's definition of new service was too broad. 
Some A4A members and AMA believe that new entrants who did not 
previously serve an airport and enter a market that already has nonstop 
service should not be eligible for incentives, as this may unfairly 
advantage the new entrant carrier at the expense of the incumbent 
carrier on the route.
    ACI-NA, AAAE, and nine airport sponsors commented that the proposed 
policy's definition of new service was too restrictive. All of these 
commenters believe that ACIPs should be permitted to provide incentives 
for frequency increases in existing markets, as stated in the 2010 
Guidebook. Several commenters specifically raised discrimination 
concerns or questions about situations where a new entrant carrier 
(that previously did not provide any service to an airport) could 
receive an incentive for starting service on a route that already had 
nonstop service from another carrier, whereas a carrier that already 
serves a different market from that airport could not receive an 
incentive for starting service on that same route. Similarly, several 
commenters believe that incumbent carriers should be eligible for 
incentives if they add frequencies in markets that they already serve.
    Some commenters had specific suggestions to limit the applicability 
of incentives for additional frequencies. Denver International Airport 
(DEN) recommended setting a minimum increased frequency that would 
qualify as an incentive, such as 50% over the previous year, and 
specifying the markets that qualify. Similarly, the Metropolitan 
Washington Airports Authority (MWAA) and the City of Phoenix Aviation 
Department (PHX) suggested that increased frequency incentives would be 
most appropriate for markets that the airport sponsor identifies as 
underserved.
    Multiple commenters linked their comments on incentives for 
frequency increases to incentives for upgauging, noting that both 
represent increases in capacity in markets that already have nonstop 
service and therefore it is logical that either both types of 
incentives be permitted or both types be prohibited.

[[Page 85348]]

    Finally, ACI-NA also commented that the definition of new service 
should be expanded to include direct, one-stop service. Houston Airport 
System (HAS) had a similar comment, noting that international air 
service to interior U.S. destinations in particular may often begin on 
a one-stop basis and that cargo service often has enroute stops. DEN 
also requested clarification about whether ``any service by a new 
entrant carrier'' includes both direct and nonstop service.
    The FAA recognizes the logic in maintaining a consistent approach 
between different forms of additional capacity on existing routes, and 
that in many cases increased capacity on an existing route can be very 
valuable to an airport and the community it serves. At the same time, 
the FAA believes that there is a distinction between, on the one hand, 
a route going from twice a week service to daily service (or daily 
service to three times a day service), and, on the other hand, a route 
going from 10 flights a day to 12 flights a day. Therefore, the FAA has 
modified the definition of new service in the final policy to include 
``a significant increase in capacity on preexisting service to a 
specific airport destination'' as permissible for airport sponsors to 
include in an ACIP. While the FAA is leaving the definition of 
``significant'' to each airport sponsor to articulate in its ACIP based 
on local circumstances, the agency encourages sponsors who choose to 
offer incentives for frequency increases to consider defining a 
threshold percentage increase in order to qualify for incentives.
    The FAA has also added language to the Service Frequency section of 
the final policy to clarify that if an airport sponsor chooses to offer 
incentives for frequency increases on preexisting service, these 
incentives:
     Are limited to one year;
     May not discriminate based on whether the frequency 
addition is from a carrier that already serves the route;
     Cannot be the only type of incentive in a sponsor's ACIP; 
and
     Should only apply to the increased frequencies to the 
extent that those frequencies result in a significant net increase in 
seat capacity to the specific airport destination. (In other words, if 
a carrier adds frequency on smaller aircraft so that there is not a 
significant increase in seat capacity, the frequency increase would not 
be eligible for an incentive.)
    The FAA is not adopting the suggestion to expand the proposed 
definition of new service to incorporate one-stop service in addition 
to nonstop service. While the FAA understands that there may be some 
value in one-stop service as a way for an air carrier to test a market, 
the value of one-stop service is significantly lower than nonstop 
service from a passenger's perspective. In addition, the FAA is 
concerned that, in a predominantly hub-and-spoke aviation system, the 
different combinations and permutations of one-stop service would make 
this very difficult to monitor.
    Seasonal Service: A4A and San Diego International Airport (SAN) 
both supported the proposed definition of seasonal service. However, 
DEN and the Greater Orlando Aviation Authority (MCO) commented that the 
International Air Transport Association (IATA) summer season lasts 
approximately seven months, from March to October and suggested that 
the FAA should define seasonal service as being offered less than seven 
months per year rather than six months, as in the proposed policy.
    The FAA agrees with the logic of matching IATA seasonal definitions 
and has modified the final policy to define seasonal service as nonstop 
service offered for less than seven months of the calendar year.
    New Entrant Carrier and Incumbent Carrier: ACI-NA objected to the 
proposed policy's definition of ``new entrants'' on the grounds that 
there is a definitional gap between incumbent carriers (who are defined 
as ``actively providing service'') and new entrant carriers (who are 
defined as ``not previously providing any air service'') because a 
carrier could have provided air service to a particular airport in 
prior years, but not be actively flying to that airport. ACI-NA 
recommended that the FAA not define ``new entrant carrier'' and 
``incumbent carrier'' in this policy and instead allow individual 
airport sponsors to define these terms in their ACIPs. ACI-NA also 
commented that some air carriers have recently begun serving smaller 
communities by contractual arrangement with bus companies and requested 
that such service be eligible for incentives if it sold by air 
carriers, even if it is not aeronautical.
    Two airport sponsors, TPA and the Port of Seattle (SEA), 
recommended modifying the new entrant definition so that new entrants 
can be considered carriers that are new to a particular market rather 
than a new carrier at a sponsor airport; several airports raised 
similar comments under the new service definition.
    The FAA's intent in defining new entrants as carriers who were 
``not previously providing any air service'' was that the new entrant 
carrier was not providing air service to the particular airport 
immediately prior to starting service. To clarify, the FAA has modified 
the final policy to use the word ``currently'' consistently to refer to 
the state of air service at the origin airport immediately prior to the 
execution of an incentive agreement (and has defined the term 
accordingly). In addition, the flexibility that the policy affords to 
airport sponsors regarding choosing whether to offer incentives for the 
restart of service that had previously been offered at the airport 
should help address the concern about the definitional gap. The FAA is 
not expanding the definition of carriers to include bus operators. Bus 
service is not considered to be aeronautical activity and is not ``a 
local facility owned or operated by the airport owner or operator.'' 
Accordingly, use of airport revenue and resources to incentivize bus 
service would be inconsistent with the requirements for the use of 
airport revenue. The FAA believes that the modifications in the final 
policy to allow incentives for incumbent carriers who add service in 
markets that they did not previously serve effectively address the 
comments from TPA and SEA on the new entrant definition.
    Preexisting Service: SAN commented that there should be a threshold 
of at least two flights per week on an annualized or a seasonal basis 
in order to qualify as preexisting service. MWAA commented that the 
seasonal service provisions should allow for a market to be considered 
unserved during the months that the seasonal service does not operate 
so that a carrier entering the market during the off-season could also 
receive incentives.
    The FAA believes that the modifications in the final policy to 
allow incentives for significant frequency increases on preexisting 
service obviates the justification for a minimum threshold for 
preexisting service, as airport sponsors may offer incentives for 
frequency increases, as long as they are consistent with the 
limitations of the final policy. The FAA has modified the definition of 
preexisting service to clarify that an airport destination served 
nonstop on a seasonal basis is considered not to be currently served 
nonstop in other months for the purposes of this policy.
    Other Clarifications: The FAA has made several other clarifications 
to the definitions and terminology throughout the policy. Based on 
several comments, the proposed policy may have been unclear at times 
when using the word ``airport'' whether the policy was referring to the 
airport offering the incentive or the airport destination.

[[Page 85349]]

Therefore, the FAA has introduced and defined the term ``origin 
airport'' as the airport which is offering an incentive under an ACIP 
and clarified that references to the ``airport sponsor'' in the policy 
are to the sponsor of the origin airport. The final policy also defines 
``airport destination'' as the airport receiving new service from the 
origin airport and uses that term consistently throughout the policy.
    In response to comments from ACI-NA, HAS and MWAA, the FAA has also 
clarified that it is permissible for ACIPs to define each airport 
within a metropolitan area as a separate airport destination.
    Finally, the FAA also re-ordered the definitions so that terms are 
in alphabetical order.

C. Seasonal Service Applicability

    Three airport sponsors commented that they support the proposed 
policy's provision that permits incentives for up to three years for 
new seasonal service to an airport destination that was previously 
unserved. AAAE generally supports increased flexibility for incentives 
for new seasonal service, but commented that the FAA should not be 
prescriptive in terms of defining the eligible timeframe. TPA commented 
that a two-year limit should be sufficient to establish a new seasonal 
service in the market. A4A commented that seasonal service incentive 
time limits should mirror time limits for other types of new service 
(two years for previously unserved markets and one year for new service 
in previously served markets).
    The FAA believes that the rationale for allowing incentives for 
seasonal service to continue for up to three years in order to build 
the market remains valid, and therefore has finalized this aspect of 
the policy as proposed.

D. New Entrant Incentives

    The proposed policy reiterated the 2010 Guidebook in stating that 
new entrants who begin nonstop service on a previously unserved route 
from the origin airport can receive incentives for up to two years, and 
that ACIPs may offer incentives to new entrant carriers for providing 
service to an airport destination with preexisting service, while 
excluding incumbent air carriers. In that case, the new entrant 
incentives are limited to no more than one year.
    PHX objected to the exclusion of incumbent carriers from incentives 
that a new entrant carrier would be eligible for, and stated that an 
airport should have flexibility to determine whether a destination 
should be eligible for incentives, rather than limit incentives based 
on whether the carrier is a new entrant. In addition, two commenters 
asked for clarification regarding this provision. TPA asked what 
happens if a second carrier begins nonstop service following the first 
entrant in the same market but within the two-year incentive period and 
specifically whether the first entrant would no longer be eligible for 
a two-year incentive. MCO asked about a similar scenario, but whether 
the second new entrant would also be eligible for two years of 
incentives if minimal time has passed between start dates.
    The FAA believes that the modifications to the new service 
definition would allow ACIPs to provide incentives to incumbent 
carriers who provide new service to an airport destination with 
preexisting service. However, the FAA has retained the new entrant 
language from the proposed policy, which gives airport sponsors 
latitude to limit incentives to new entrants on routes with preexisting 
service if they choose to do so, on the grounds that a new entrant 
carrier is temporarily not similarly situated to an incumbent carrier 
at the origin airport.
    Regarding the questions raised by TPA and MCO, the FAA's 
interpretation is that a second new entrant into a given market would 
only be eligible for one year of incentives, as the airport destination 
in question would no longer be ``not currently served nonstop from the 
origin airport.'' The timeframe of incentives for the first new entrant 
would need to be addressed according to the airport sponsor's ACIP and 
the contract with the carrier. As discussed below, the FAA encourages 
airport sponsors to define the criteria for the ``first air carrier to 
establish service'' in their ACIPs in order to avoid disputes.

E. Procedures If ACIP Has a Limited Budget

    ACI-NA, DEN, and SAN expressed support for the proposed policy's 
provisions that permit airport sponsors of any size to limit incentives 
to one carrier in cases where the sponsor has a limited budget, 
provided that information regarding the ACIP, including the limited 
availability, is disclosed at least 30 days prior to signing a contract 
with a carrier. AAAE supports the flexibility to limit incentives but 
commented that the FAA's proposed language on how to do so was too 
restrictive.
    A4A expressed general support for the disclosure provisions, along 
with concern that the proposal may be insufficient to prevent 
undisclosed dealings with a favored carrier. A4A recommended that the 
policy state that disclosure is a requirement rather than an 
expectation, that ``posting'' the ACIP on a website is insufficient and 
should be replaced by direct communication to carriers, and that an 
airport sponsor should not be allowed to commence individual carrier 
discussions regarding incentives under a limited ACIP until after the 
ACIP (including limitations) is disclosed. A4A also requested that the 
FAA clarify what it means to be the first carrier to ``establish new 
service'' or ``enter the market'' because these may have different 
interpretations and pointed out that the proposed policy uses different 
phrasing in the New Service vs Preexisting Service compared to the New 
Entrant Carriers section. In contrast, ACI-NA recommended that the FAA 
leave the interpretation of these phrases to the reasonable discretion 
of airport sponsors.
    The FAA believes that the proposed policy generally strikes an 
appropriate balance between practicality and the benefits of 
disclosure. The FAA remains convinced that it is appropriate for 
disclosure to be an expectation rather than a requirement due to the 
non-regulatory nature of this policy.
    Regarding the definition of the ``first carrier'' that 
``establishes new service'' or ``enters the market,'' the FAA agrees 
with A4A that the language should be more consistent between the two 
referenced sections of the policy (although not exactly the same 
because the sections are describing different cases). The final policy 
uses ``establishes service to the origin airport'' in the New Entrant 
Carriers section. The FAA agrees with ACI-NA that the definition of 
establishing service is best left to individual airport sponsors rather 
than prescribed by the FAA; however, the FAA agrees with A4A that the 
criteria should be clearly defined and disclosed. Therefore, the final 
policy adds ``criteria by which the first air carrier to establish 
service is determined'' to what airport sponsors are expected to 
disclose at least 30 days prior to signing a contract with a carrier.
    Finally, in response to comments discussed in the ACIP Transparency 
section, and to be consistent with modifications made to that section 
of the policy to clarify that airport sponsors are not expected to 
disclose detailed air carrier incentives for specific routes in advance 
of signing a contract, the FAA has removed language about posting 
planned incentives as part of the disclosure expectations.

F. Service Frequency

    The FAA received no comments on the proposed language to permit 
airport sponsors to allow different incentive levels for different 
frequencies of service

[[Page 85350]]

(e.g., three flights per week versus five flights per week), and has 
maintained this language in the final policy.
    The FAA has also expanded this section to describe the conditions 
under which an airport sponsor may choose to offer incentives for 
frequency increases on preexisting service, as detailed above under 
Definitions.

G. Cargo Carriers

    A4A, AAAE, and DEN all expressed support for the proposed policy's 
clarification that it is not unjustly discriminatory for an ACIP to 
distinguish between passenger and cargo carriers. The FAA has 
maintained this language in the final policy.

H. Incentives Based on Number of Passengers or Seat-Miles

    ACI-NA, along with three individual airport sponsors, expressed 
support for the proposed policy regarding incentives that are based on 
the number of passengers or seat-miles flown on new service. SAN, while 
supporting the proposed policy, also commented that the FAA should also 
consider incentives on a per passenger basis relative to the proportion 
of total passengers that an incentivized airline carries at the 
airport. A4A expressed strong opposition to these types of incentives, 
alleging that they violate the Airline Deregulation Act (ADA), the 
FAA's guiding principles on economic nondiscrimination, and the 
prohibition on use of airport revenues to subsidize air carriers.
    The FAA believes that the underlying rationale for these types of 
incentives, as discussed in the proposed policy, continues to justify 
incentives that vary based on passengers or seat-miles flown and that, 
provided that ACIPs are not restricted to particular aircraft types, 
these types of incentives do not violate the ADA or other restrictions. 
In addition, the FAA notes that in many cases airport charges increase 
based on the size of the aircraft or number of passengers carried, and 
the policy limits fee reductions to the charges that an air carrier 
would have otherwise incurred. The FAA has made minor wording changes 
to this section in the final policy to improve clarity. Based on the 
modification to the final policy to allow incentives for frequency 
increases, the FAA believes that the scenario outlined by SAN in its 
comment would generally be consistent with the policy, subject to 
review of a particular incentive for discriminatory effect.
    In the section on aircraft type, the FAA has clarified in the final 
policy that incentives based on specific aircraft types are unjustly 
discriminatory, in order to distinguish from incentives that vary based 
on the size of an aircraft.

I. Incentives for Upgauging

    ACI-NA, AAAE, and eight individual airport sponsors expressed 
general support for upgauging incentives. Several of these individual 
airport sponsors suggested specific limitations. MCO and the Gerald R. 
Ford International Airport Authority (GRR) commented that incentives 
for upgauging should be permitted if there is a net increase in service 
offered. DEN suggested a minimum capacity increase threshold, such as 
50 percent above the previous year, in order to qualify for an 
upgauging incentive and that airport sponsors should clearly designate 
markets that qualify. AMA similarly recommended limiting upgauging 
incentives to cases where the new aircraft has at least 50 percent more 
seats than the previous aircraft. In addition, AMA suggested 
restricting upgauging incentives so that upgauging cannot be the only 
incentive in the sponsor's ACIP, upgauging cannot be the only incentive 
granted to a carrier for any specific incentive period, and the carrier 
receiving an upgauging incentive cannot contract its schedule in order 
to operate fewer flights with the larger aircraft or cancel other 
routes to the airport during the incentive period. SAN does not take a 
stance on upgauging incentives, but notes that upgauging could be a 
useful tool for airports in the future to maximize airfield capacity.
    A4A, ACI-NA, and TPA all noted that there is a link between 
upgauging and frequency additions on preexisting service, in that both 
represent capacity increases in markets that are already served, and 
therefore they should be treated consistently. ACI-NA and TPA asserted 
that incentives should be permitted in both cases. A4A stated that 
upgauging does not fit the definition of new service in the policy as 
proposed. However, A4A added that if the FAA does not adopt the 
previously proposed definition of new service, then A4A takes no 
position on whether incentives for upgauging should be permitted, as 
their members have different views on the issue.
    The FAA agrees with the commenters that there should be consistency 
in the treatment of increased capacity in markets that are already 
served. Therefore, in the final policy, the FAA adopts similar language 
for upgauging as described for frequency additions above, which also 
incorporates many of the suggestions from AMA, DEN, GRR, and MCO. 
Specifically, if upgauging incentives are permitted as part of a 
sponsor's ACIP, those incentives are limited to one year, and cannot be 
the only incentive in the sponsor's ACIP. In addition, in order to 
receive incentives, the upgauging must result in a significant net 
increase in seat capacity to the airport destination involved. As in 
the case of incentives for frequency increases, the FAA is leaving the 
definition of ``significant'' to each airport sponsor to articulate in 
its ACIP based on local circumstances, but encourages sponsors who 
choose to offer incentives for upgauging to consider defining a 
threshold percentage increase in order to qualify for incentives. The 
FAA is not adopting AMA's suggested restriction that upgauging cannot 
be the only incentive granted to a carrier for any specific incentive 
period, but notes that an airport sponsor could choose to add that 
provision in its published ACIP if deemed appropriate for its local 
circumstances.

J. Legacy vs Low-Cost Carriers

    The FAA received no comments regarding the proposed provision to 
prohibit ACIPs from targeting carriers with particular types of 
business models or being designed for a preferred carrier; the final 
policy adopts this provision as proposed with one minor clarifying 
change.

K. ACIP Transparency

    A4A and five individual airport sponsors expressed general support 
for the proposed policy's provisions regarding ACIP transparency. 
However, several of these commenters also gave specific suggestions for 
modifications in this area. A4A recommended that the policy state that 
disclosure is a requirement rather than an expectation and that the 
airport sponsor be required to provide direct notification to the air 
carriers through their designated airport affairs representative, as 
posting the ACIP on the airport sponsor's public website or notifying 
industry trade groups may not constitute sufficient notification. A4A 
also recommended expansion of the provision regarding airport sponsors 
providing the necessary financial documentation to demonstrate that 
there is no cross-charging and that an ACIP has no effect on rates and 
charges of other aeronautical users. A4A stated that the only way to 
demonstrate that landing fee and terminal rental waivers meet these 
requirements is for the airport sponsor to include the associated 
landed weight and/or terminal space in the rates and charges 
calculation along with an associated credit for the waived fees, and 
also suggested the addition of language

[[Page 85351]]

specifying that an ACIP may not reduce payments or credits that a non-
incentivized carrier would otherwise receive from the airport sponsor 
in the absence of the incentivized service.
    While supporting most of the transparency provisions, three airport 
sponsors raised concerns that the proposed policy could be interpreted 
as calling for airport sponsors to provide advanced notice of each 
specific incentive agreement with an air carrier, which may be 
impractical and raises competitive issues. ACI-NA and several other 
airport sponsors also raised concerns or questions regarding this 
issue. While expressing general support for transparency, West Virginia 
International Yeager Airport (CRW) requested that the final policy 
clarify that the airport sponsor may negotiate and adjust the published 
ACIPs on a case-by-case basis (so long as the agreed-to elements of the 
incentives comply with the ACIP policy), depending on the needs of the 
airline and the airport for the new service offered.
    ACI-NA, AAAE and five individual airport sponsors generally 
objected to the transparency policy as proposed. Most of these 
commenters expressed concern that the public disclosure provisions were 
overly burdensome, in some cases impractical, and unnecessary because 
the information is in many cases already publicly available or would be 
obtainable through a public records request. Several of these 
commenters suggested eliminating the transparency section entirely and 
allowing airport sponsors to determine what and when to disclose. ACI-
NA expressed support for the public notice not being an ``absolute 
requirement.''
    Several stakeholders also raised clarifying questions regarding the 
interpretation of proposed provisions regarding ACIP transparency. A4A 
requested clarification on whether the transparency provisions are 
intended to apply to air carriers as well as the public, noting 
potential inconsistent use of terms in the proposed policy. DEN 
requested clarification as to whether the policy calls for airport 
sponsors to post incentives actually granted under incentive agreements 
with carriers or incentives dispersed, since these may not be the same 
thing. TPA requested that the FAA provide a more specific definition of 
``periodic'' in terms of how frequently airport sponsors should post 
listings of carriers benefiting from incentives. TPA also inquired 
whether full incentive agreements and the financial documentation need 
to be published as public notice documents.
    The FAA believes that increased transparency is a necessary element 
in the policy, both in terms of public availability before an ACIP is 
implemented and disclosure once it is in effect, because the 
transparency helps to ensure compliance with Grant Assurances 22, 23, 
24, and 25 and related policies, including Rates and Charges and 
Revenue Use. The policy attempts to strike a balance of setting an 
expectation of reasonable disclosure without being overly burdensome. 
The final policy largely adopts the proposed policy in this area with 
some clarifications.
    The intent of the policy is that airport sponsors disclose the 
existence of an ACIP and its terms and conditions at least 30 days in 
advance of signing an incentive agreement with a carrier so that all 
carriers are aware of the existence of an incentive program and have an 
opportunity to participate or raise concerns. However, there is not an 
expectation for advance notice of a specific incentive agreement 
because, as noted in several comments, such notice would potentially 
prematurely disclose competitive commercial information. Such 
information would be published periodically on a retroactive basis. 
Therefore, the FAA has added a clause in the final policy to clarify 
that advance notice of specific incentive agreements is not expected as 
long as those agreements comply with the terms and conditions of the 
previously published ACIP. The FAA notes that if an airport sponsor 
were to adjust the published ACIP as a result of negotiations with a 
particular air carrier so that the terms would be different than those 
previously published, the FAA's expectation would be that the airport 
sponsor would publish the revised terms of conditions of its ACIP at 
least 30 days prior to signing an incentive agreement. Such a 
modification of the terms of an ACIP for a specific carrier without 
notice would potentially raise concerns of unjust discrimination.
    In response to one of A4A's comments, the FAA is adding language to 
the third guiding principle to clarify that non-incentivized carriers 
may not be charged ``directly or indirectly'' for the costs of an ACIP 
unless all non-participating carriers agree.
    The FAA remains convinced that it is appropriate for disclosure to 
be an expectation rather than a regulatory requirement due to the non-
regulatory nature of this policy. The FAA believes that posting an ACIP 
on an airport sponsor's public website or providing information through 
appropriate industry trade groups likely provides broader notice than 
communicating an ACIP through the designated airport affairs 
representative; notification through the airport affairs representative 
may provide effective notice to incumbent carriers serving the airport, 
but may not reach potential new entrant carriers, who would also be 
interested parties.
    Regarding A4A's comments requesting clarification, the transparency 
provisions are primarily intended to apply to airport sponsors 
disclosing information to air carriers, although the information should 
be available to the broadest possible universe of carriers (i.e., those 
who currently serve the airport and those who do not). To avoid 
confusion, the final policy deletes the phrase ``for the public'' from 
the first clause of the proposed policy on ACIP transparency. In 
response to DEN's question about whether airport sponsors are expected 
to post incentives granted or actual dispersed funds, the policy does 
set expectations of posting the incentives granted undersigned 
agreements, although nothing prevents an airport sponsor from also 
disclosing the actual dispersed funds if the sponsor believes that 
doing so would provide a more complete picture. A sponsor may also have 
separate obligations to disclose rate information to incumbent 
carriers. Regarding TPA's request for a more specific definition of 
``periodic,'' the FAA expects each airport sponsor to determine a 
reasonable frequency for publishing this information, given that a 
``one size fits all'' solution is likely not appropriate as incentive 
programs may be utilized differently at different airports. Similarly, 
in response to TPA's inquiry about whether documents must be published 
as public notice documents, the FAA is not prescribing particular means 
of issuing notice and recognizes that local public information 
requirements may vary, but whatever means are used must be effective in 
advising carriers potentially eligible for or affected by the ACIP of 
its existence.

L. Subsidies/Third-Party Costs

    ACI-NA, GRR, and the Port Authority of New York and New Jersey 
(PANYNJ) expressed opposition to the proposed policy's statement that 
``a waiver or assumption of costs that would normally be charged by a 
third party (ground handling, fuel, etc.) would be considered a subsidy 
and is not permissible for an ACIP.'' ACI-NA commented that ``costs 
that would normally be charged by a third party'' has different 
meanings at different airports and states that the airport sponsor 
should be able to waive costs such as ground handling or fuel service 
fees under an ACIP when the sponsor is

[[Page 85352]]

the sole provider of those services at the airport. ACI-NA and PANYNJ 
suggested that airport sponsors should be able to waive fees that the 
sponsor charges to third parties that are then passed on to air 
carriers. GRR commented that several successful incentive programs have 
included ground handling waivers and airport sponsors should have 
flexibility to provide such a waiver if/when appropriate.
    The final policy makes no changes to the proposed policy in this 
area. The FAA is concerned that permitting waivers of charges for 
ground handling by a commercial operator would cross a line into 
subsidies prohibited by the requirements for use of airport revenue. 
Allowing the sponsor to pay these charges would also potentially result 
in inequitable treatment across airports depending on whether the 
airport sponsor is the sole provider of ground handling services. 
Therefore, the final policy maintains the prohibition on including 
costs that are normally charged by a third party, with ``normal'' 
having the meaning of standard practice industrywide.

M. Airport v. Non-Airport Revenues and Technical Assistance

    A4A, AAAE, ACI-NA, and five individual airport sponsors expressed 
general support for the FAA's proposed policy regarding distinctions 
between airport revenues and non-airport revenues, including the 
proposal that airport staff be permitted to provide certain types of 
technical assistance to non-airport entities regarding ACIPs that do 
not use airport revenue, which represents a change to the 2010 
Guidebook.
    A4A commented that the policy should be modified to have airport 
staff disclose the details of their technical assistance to the air 
carrier airport affairs representative (or designee), and to clarify 
that the policy prohibits airport staff from handling or co-mingling 
non-airport funds. ACI-NA, AAAE and the Cedar Rapids Airport Commission 
(CID) commented that the policy should not list three specific types of 
technical assistance that airport staff can provide, should include an 
expanded list, or should clarify that the list is a non-exhaustive set 
of examples. AAAE also commented that many of its members believe that 
the policy should be modified to allow airport staff to participate in 
decision-making processes (including voting) regarding non-airport 
ACIPs and/or handle non-airport funds in certain limited circumstances. 
CRW requested that the FAA clarify that the term ``local'' as used 
throughout the policy includes programs sponsored by state governments 
and other non-federal entities.
    In the final policy, the FAA has updated references to ``local'' 
governments to include state and other non-federal entities. In 
addition, the final policy explicitly clarifies that airport staff may 
not have responsibility for the handling and disposition of non-airport 
funds. The FAA did not adopt the suggestion to set an expectation that 
airport staff disclose the details of their technical assistance to 
their air carrier airport affairs representative, as doing so could 
reveal confidential commercial information. The FAA believes that 
having airport staff participate in decision-making processes or handle 
non-airport funds crosses the line between technical assistance and 
active participation and therefore the final policy continues to 
prohibit these activities. The FAA also believes that it is helpful to 
list types of technical assistance that are permitted and notes that 
these are fairly broad categories that encompass the longer list of 
examples of technical assistance that were included in ACI-NA's 
comment. The final policy therefore maintains this listing. However, 
the FAA has added text to clarify that other similar types of technical 
assistance consistent with the intent and parameters of this section 
are also permitted.

N. Marketing Incentives

    A4A, AAAE, ACI-NA, and 13 individual airport sponsors commented 
that the FAA's proposal to prohibit airport sponsors from transferring 
marketing incentive funds to a carrier was infeasible and inconsistent 
with industry practice for how marketing programs are executed. Several 
of these commenters stated that it would be impractical for airport 
sponsors, particularly as public entities, to execute individual 
contracts with marketing service providers, as called for under the 
proposed policy. Many commenters suggested alternate approaches that 
are closer to current practice and would permit airport sponsors to 
transfer marketing incentive funds to a carrier provided that there is 
appropriate documentation of the expenditures. PANYNJ suggested that in 
order for an airport sponsor to transfer marketing ACIP funds directly 
to an air carrier, the sponsor should maintain sufficient documentation 
that demonstrates that funds would be used only for approved marketing 
activities and that those funds are not transferred until after 
services have been rendered.
    The FAA appreciates the unified insight from the industry on this 
issue and believes that PANYNJ's suggestion strikes an appropriate 
balance between practicality and ensuring that prohibited subsidies are 
avoided. The final policy incorporates the suggested language 
describing the requisite documentation to support the payment of 
marketing funds directly to an air carrier.

O. Incentives for Individual Travelers

    The FAA received no comments regarding the proposed provision; the 
final policy adopts this provision as proposed.

P. Charges for Non-Participating Carriers

    A4A expressed support for the proposed policy's provision that an 
ACIP may not increase fees charged to non-participating carriers or 
other aeronautical users and tenants of the airport subject to the 
requirement for reasonable fees under 49 U.S.C. 47107(a)(1) and Grant 
Assurance 22.
    A4A provided a recommendation to clarify that an ACIP may not 
reduce payments or credits that would otherwise be received from the 
airport sponsor in the absence of the incentivized service because cash 
payments are not always provided to air carriers.
    The FAA has incorporated the proposed clarification into the final 
policy, as this is consistent with the intent of the policy language.

Q. Self-Sustaining Rate Structure

    The FAA received no comments regarding the proposed provision; the 
final policy adopts this provision as proposed.

R. Restart of Previous Service

    AAAE, ACI-NA, PANYNJ, and SAN all expressed general support for the 
proposed policy's provision to permit airport sponsors to use their own 
discretion when choosing whether to offer incentives for a carrier to 
restart service that the same carrier had offered previously but 
cancelled due to significant external circumstances or poor route 
performance, with examples of the COVID-19 pandemic or the 9/11 
terrorist attacks provided as circumstances where such flexibility 
would be helpful. A4A expressed conceptual support of the discretion to 
provide incentives to restart service that ended due to significant 
external circumstances but opposition to the inclusion of poor route 
performance as a justification, on the grounds that this raises 
concerns of unjust discrimination and potential abuse by an air 
carrier. A4A also recommended that the policy include specific waiting 
periods in

[[Page 85353]]

order to qualify for incentives related to the restart of service. DEN 
also requested more specific guidelines in this area, and expressed 
concern that leaving incentives for the restart of service to the 
discretion of individual airport sponsors may put some airports at a 
competitive disadvantage due to varying interpretations.
    The FAA has made two modifications to the final policy as a result 
of the comments. The FAA's intent was that this flexibility would be 
exercised in the aftermath of extraordinary external events such as 
natural or manmade disasters, including (for example) the COVID-19 
pandemic. To convey this, the final policy refers to ``extraordinary'' 
external circumstances rather than ``significant,'' and eliminates the 
reference to ``poor route performance in past years'' as a 
justification for an airport sponsor to offer incentives for the 
restart of previously cancelled service. After this adjustment, the FAA 
believes it is not necessary to add a specific waiting period or 
further guidelines regarding the implementation of incentives for the 
restart of previous service, given that the impact of an extraordinary 
external circumstance may vary depending on the event and may be quite 
different in different locations. Therefore, airport sponsors should 
have flexibility to implement such an incentive if they choose to do so 
based on their individual circumstances, as long as it is consistent 
with other provisions in the final policy (including the limits on the 
length of time an incentive can be in effect).

S. FAA Review of ACIPs

    The proposed policy stated that the FAA will review an ACIP for 
compliance with an airport sponsor's Federal obligations if the airport 
sponsor requests such a review, but that the agency does not approve 
ACIPs. A4A commented that air carriers should also be permitted to 
request that the FAA review an airport sponsor's ACIP. HAS commented 
that if an airport sponsor seeks FAA's input on an ACIP, the agency 
should provide either approval or a detailed explanation of what 
specifically needs to be changed. DEN recommended that the FAA develop 
and implement a mechanism for airport sponsors to request formal 
written approval that a proposed ACIP is consistent with the five 
general principles of acceptable ACIPs.
    The FAA agrees that it would be appropriate for an air carrier to 
request FAA review of an ACIP and notes that this informal review could 
reduce the likelihood of more formal disputes; therefore, the final 
policy permits a potentially affected air carrier to request FAA review 
of an ACIP. While the FAA does not formally approve ACIPs, the agency 
would provide feedback on whether the ACIP appears to be in line with 
Grant Assurances and will provide recommendations for modification if 
appropriate. The FAA also notes that ACIPs are typically reviewed as 
part of the agency's regular airport financial reviews.

T. Existing Incentives/Effective Date

    SAN expressed support for the proposed policy's provision allowing 
existing ACIPs that complied with the 2010 Guidebook to sunset as 
programs compliant with the new policy are brought online. DEN 
commented that it would be better for the FAA to set a firm date when 
the final policy would be effective and noted that airports would need 
at least 60 days' notice from the date of publication of a final policy 
in order to provide time to revise and gain internal approval of the 
revised ACIP and provide the requisite 30 day notice to air carriers. 
PHX noted that the FAA should allow ample time for airports to respond 
to proposed changes and implement them, given that the ACIP guidance 
has remained unchanged since 2010.
    The FAA recognizes DEN's comment about the logistics involved in 
revising an ACIP and posting it for 30 days in compliance with this 
policy. At the same time, FAA believes it is important to minimize the 
transition period. Therefore, the agency has modified the final policy 
so that incentive agreements contracted under ACIPs 60 days or more 
after the issuance date must comply with the new policy. The agency 
notes that any specific incentive agreements contracted prior to that 
point under ACIPs that were in effect prior to this new policy being 
issued should comply with the 2010 Guidebook and all grant assurances 
and other FAA policies. The FAA has also clarified that the relevant 
date is when the contract is signed, as the terms ``initiated'' and 
``provided'' may have been unclear. Finally, the FAA has clarified that 
any new ACIP or modification to an existing ACIP (as opposed to a 
specific incentive agreement under an ACIP that was already in effect) 
after the issuance of this new policy must comply with the new policy 
(i.e., without a 60-day grace period).

U. Other Topics/Miscellaneous

    CRW commented that the FAA should provide clarification as to the 
circumstances when a sponsor can use airport funds as a SCASDP match 
without violating Grant Assurance 25. The relationship of SCASDP to FAA 
grant assurances and the Revenue Use Policy is discussed in Section C. 
(Related Federal Programs) under the Background section of this 
document.
    CID's comments raised the question of whether those portions of the 
2010 Guidebook not addressed in the updated policy will continue to 
apply. The FAA reiterates that the updated policy entirely supersedes 
the 2010 Guidebook.
    A4A suggested that FAA consider developing a supplemental document, 
such as a frequently asked questions (FAQs) or quick reference guide, 
in conjunction with the final policy. The FAA will consider developing 
such a document on an as-needed basis.
    ACI-NA requested that the FAA allow incentives based on time of day 
to allow airport sponsors to provide incentives to air carriers to fly 
at off-peak times. The FAA believes that the suggestion by ACI-NA is 
effectively a congestion management program using airport fees. As 
such, it is outside the scope of this policy.
    Exhaustless, Inc., objected to what it characterizes as FAA and 
State interference in the open, competitive market for air 
transportation. Exhaustless recommended that all states, airports, 
cities, and any other governmental entity stop all activity to 
subsidize air carriers to comply with various laws and air transport 
agreements. The FAA notes that air service incentives are standard 
practice within the aviation industry, including in other countries. 
Incentives offered by airport sponsors are intended to be temporary and 
justified on the basis of unique issues associated with the start-up of 
new air service. No changes to the policy were adopted in response to 
this comment.
    MWAA commented that the FAA should engage in more meaningful 
dialogue with airport sponsors, and that a 60-day comment period is 
insufficient for sponsors to provide meaningful input. The FAA 
disagrees with this comment and notes that the development of the draft 
policy included discussions with industry stakeholders. FAA chose to 
engage in a formal public comment process and believes that the 60-day 
comment period is sufficient given the scope of the policy.

IV. Availability of Documents

A. Policy Documents

    You can get an electronic copy of this policy using the internet 
by:

[[Page 85354]]

    (1) Searching the Federal eRulemaking portal (www.regulations.gov);
    (2) Visiting FAA's Regulations and Policies web page at (https://www.faa.gov/regulations_policies; or
    (3) Accessing the Government Printing Office's web page at (heep://
www.gpoaccess.gov/index.html).
    You can also get a copy by sending a request to the Federal 
Aviation Administration, Office of Airport Compliance and Management 
Analysis, 800 Independence Avenue SW, Washington, DC 20591, or by 
calling (202) 267-3085. Make sure to identify the docket number, notice 
number, or amendment number of this proceeding.

B. Comments Submitted to the Docket

    Comments received may be viewed by going to https://www.regulations.gov and following the online instructions to search the 
docket number for this action. Anyone is able to search the electronic 
form of all comments received into any of the FAA's dockets by the name 
of the individual submitting the comment (or signing the comment, if 
submitted on behalf of an association, business, labor union, etc.).

C. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires the FAA to comply with small entity requests for 
information or advice about compliance with statutes and regulations 
within its jurisdiction. A small entity with questions regarding this 
document may contact its local FAA official, or the person listed under 
the FOR FURTHER INFORMATION CONTACT heading at the beginning of the 
preamble. To find out more about SBREFA on the internet, visit https://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

The Policy

    In consideration of the foregoing, the FAA issues the following 
statement of policy on air carrier incentive programs, to supersede the 
Air Carrier Incentive Program Guidebook issued in 2010.

Air Carrier Incentive Programs

    Many U.S. airport sponsors have found it beneficial to encourage 
new air service and new carriers at their airports by offering air 
carrier incentive programs (ACIPs), in the form of reductions or 
waivers of airport charges, and/or support for marketing new service.
    ACIPs represent a limited exception to the general rule stated in 
Grant Assurance 22 paragraph 22.e., guaranteeing all carriers non-
discriminatory and equivalent rates and charges for each carrier's 
category. FAA has reconciled this exception with the general rule on 
the understanding that a new carrier operating at an airport, or a 
carrier starting a new route, operates at a disadvantage with 
established carriers until the new service becomes known and accepted. 
In that sense, the carrier operating new service is not similarly 
situated to established carriers, and a sponsor may reduce charges to 
the new service carrier in some circumstances, for a limited time, 
without violating Grant Assurances 22, 23, 24, or 25.
    In considering whether an ACIP complies with a sponsor's Federal 
grant agreements, the FAA will apply these general principles to the 
particular elements of the ACIP:
     Discrimination between carriers participating in an ACIP 
and non-participating carriers must be justified and time-limited. 
Differences in airport charges for carriers under an ACIP from those 
charged to other carriers at an airport must not be unjustly 
discriminatory. Differences in charges must be justified by differences 
in the carriers' costs of starting and marketing new service at the 
airport and must be temporary.
     A sponsor may not use airport revenues to subsidize air 
carriers. Using airport revenue for cash payments and other forms of 
subsidy for a carrier providing new service is considered revenue 
diversion and is therefore prohibited by grant agreements and Federal 
law. Fee reductions, fee waivers, and marketing assistance as 
incentives to new service are permitted to the extent described in the 
Policy and Procedures Concerning the Use of Airport Revenue.
     A sponsor may not cross-charge non-participating carriers 
or other aeronautical users to subsidize ACIP carriers. Carriers not 
participating in an ACIP may not be charged directly or indirectly for 
the costs of the ACIP or for airport costs left uncovered as a result 
of the reduction or waiver of charges for an ACIP carrier, unless all 
non-participating carriers agree.
     The terms of an ACIP should be made public. Publishing the 
intent to implement an ACIP, as well as information on how the ACIP is 
being used, ensures all eligible carriers are aware of the program, 
allows nonparticipating operators to review the potential effect of the 
ACIP on standard airport rates and charges, and minimizes the grounds 
for complaints of unjust discrimination.
     Use of airport funds for an ACIP must not adversely affect 
airport operations or maintenance. A sponsor adopting an ACIP must 
maintain a self-sustaining rate structure that continues to provide 
funds for necessary operations and maintenance responsibilities, 
without increasing rates charged to non-participating operators.
    Guidance on particular program elements in this policy applies 
generally to each of those elements. For variations on those elements, 
or program elements not specifically addressed in this guidance, the 
above five principles will govern the agency's ultimate determination 
of whether a particular ACIP is consistent with the sponsor's AIP Grant 
Assurances.

I. Definitions

    A. Airport destination: The airport receiving new service from the 
origin airport. Each airport within a metropolitan area may be defined 
as a separate airport destination for purposes of this policy.
    B. Currently: For the purposes of this policy, ``currently'' means 
the time immediately prior to the signing of an incentive agreement.
    C. Incumbent Carrier: An air carrier currently providing air 
service to the origin airport.
    D. New Entrant Carrier: An air carrier that is not currently 
providing any air service to the origin airport.
    E. New Service:
    1. Any nonstop service to an airport destination not currently 
served with nonstop service from the origin airport;
    2. Any service to the origin airport by a new entrant carrier; or
    3. A significant increase in capacity on preexisting service to a 
specific airport destination.
    F. Origin airport: The airport that is providing an incentive under 
an ACIP. For the purposes of this policy, the ``airport sponsor'' is 
the sponsor of the origin airport.
    G. Preexisting service: Service to any airport destination that is 
currently served nonstop from the origin airport. An airport 
destination served nonstop only in one season is considered not 
currently served nonstop during the off-season.
    H. Seasonal Service: Nonstop service that is offered for less than 
7 months of the calendar year.

[[Page 85355]]

II. An ACIP May Contain Any of Several Elements That Do Not Unjustly 
Discriminate Against Non-Participating Carriers, Consistent With Grant 
Assurances 22 and 23

A. New Service v. Preexisting Service

    1. Limiting an incentive to new service is not in itself unjust 
discrimination. Incentives for flights to an airport destination not 
currently served with nonstop service may be provided for up to two 
years.
    2. New seasonal services (to an airport destination not currently 
served) are allowed to receive incentives for 3 seasons of service, up 
to 3 consecutive years from the start of the incentive.
    3. Generally, new service incentives must be available to all 
carriers offering new service on the same basis but are subject to the 
distinctions permitted under other paragraphs in Section II of this 
policy.
    a. However, airport sponsors are allowed to restrict incentives for 
new service if they have a limited budget. Airport sponsors are allowed 
to restrict incentives to one carrier if they have disclosed to all 
carriers that they are limiting incentives to only the first air 
carrier that establishes new service.
    b. Airport sponsors are expected to provide public notification of 
the availability of an ACIP, including any limits on availability and 
criteria by which the first air carrier to establish service is 
determined, for a minimum of 30 days before signing a contract with a 
carrier.

B. New Entrant Carriers

    1. Incentives for a new entrant carrier on nonstop service to an 
airport destination that is not currently served nonstop from the 
origin airport can be provided for up to two years.
    2. Incentives can be offered to new entrant carriers for providing 
service to an airport destination with preexisting service, while 
excluding incumbent air carriers. In that case, the new entrant 
incentives are limited to no more than one year. After one year, the 
new entrant would be considered an incumbent air carrier, and similarly 
situated to other carriers at the airport. This applies to new entrants 
providing seasonal service as well as those providing year-round 
service.
    3. Generally, new entrant incentives must be available to all new 
entrant carriers on the same basis. The ACIP may not select one new 
entrant and deny the program to another new entrant.
    a. However, if an airport sponsor has a limited budget and has 
disclosed to all carriers that they are restricting incentives to only 
the first new entrant that establishes service to the origin airport, 
then the airport sponsor is allowed to limit incentives to one carrier.
    b. Airport sponsors are expected to provide public notification of 
the availability of an ACIP, including any limits on availability and 
criteria by which the first air carrier to establish service is 
determined, for a minimum of 30 days before signing a contract with a 
carrier.

C. Service Frequency

    1. It is not unjustly discriminatory to offer different levels of 
incentives for different frequencies of service (i.e., daily versus 
less than daily). For example, incentives typically offered for 5 days 
a week service can be discounted 40% for 3 days a week service.
    2. If an airport sponsor offers incentives for increased 
frequencies on preexisting service, these incentives are limited to no 
more than one year. If offered, this incentive must be made available 
to any carrier adding frequencies to the airport destination, 
regardless of whether the carrier previously provided nonstop service 
to that airport destination.
    a. Incentives for increased frequencies on preexisting service are 
considered supplemental to other incentives and cannot be the only 
incentive in the sponsor's ACIP.
    b. Incentives should only apply to the increased frequencies to the 
extent that those frequencies result in a significant net increase in 
seat capacity to the specific airport destination.

D. Cargo Carriers

    1. It is not unjustly discriminatory for incentives to distinguish 
between passenger and cargo carriers.

E. Per-Passenger and Per-Seat Mile Incentives

    1. Incentives that vary on a per passenger or per seat-mile basis 
are not inherently unjustly discriminatory, but the airport sponsor 
should ensure that the incentives offered would not be considered a 
subsidy and would not result in unjust discrimination against non-
participating carriers.
    2. The total value of fee reductions offered as an incentive on a 
per passenger or per seat-mile basis cannot exceed the amount of the 
fees that otherwise would have been incurred by a carrier for its 
operations at the airport.

F. Aircraft Type

    1. Incentives based on specific aircraft types are unjustly 
discriminatory because they could unreasonably exclude certain carriers 
that do not operate the type of aircraft identified.
    2. Incentives for upgauging, to the extent they are allowed as a 
significant increase in capacity on a preexisting route, must be 
structured to avoid limitation to a particular aircraft type or types 
and are limited to no more than one year.
    a. Incentives for upgauging on preexisting service are considered 
supplemental to other incentives and cannot be the only incentive in 
the sponsor's ACIP.
    b. Upgauging incentives should only apply to the increased capacity 
if there is a significant net increase in seat capacity to the specific 
airport destination.

G. Legacy v. Low-Cost Carriers

    1. Incentives cannot target carriers with particular types of 
business models (e.g., legacy versus low-cost carriers), nor should 
they be designed for a preferred carrier.

H. ACIP Transparency

    1. The FAA expects airport sponsors to provide effective 
notification of the availability and implementation of ACIPs to both 
incumbent and potential new entrant carriers (e.g., posting on an 
airport sponsor's public website; notification to industry trade 
groups). Information posted should include the incentives offered; the 
program eligibility criteria; identification of new service; and for 
incentives awarded, a periodic listing of all carriers benefiting from 
the ACIP, the incentives received, and identification of the 
incentivized service.
    2. An airport sponsor is expected to provide effective public 
notice of an ACIP at least 30 days before signing an agreement with a 
carrier to implement an incentive.
    3. Advance public notice is not expected of a specific incentive 
agreement with a carrier as long as the agreement is consistent with 
the previously publicized ACIP. Lists of specific incentive agreements 
should be published periodically as described in paragraph H.1.
    4. To ensure transparency, an ACIP agreement should be a standalone 
document, consistent with the published ACIP information, and not 
embedded with any other agreement the airport sponsor and the carrier 
may enter into, such as a lease or operating agreement.
    5. Airport sponsors should make information on funding for any ACIP 
available to all aeronautical users at the airport, and sponsors should 
be ready to provide the necessary financial

[[Page 85356]]

documentation to demonstrate that there is no cross-charging and that 
the program has no effect on rates and charges of other aeronautical 
users.

III. An ACIP May Not Include Direct or Indirect Subsidies of Air 
Carriers, as Prohibited by 49 U.S.C. 47133 and 49 U.S.C. 47107, and 
Grant Assurance 25

A. Incentives v. Subsidies

    1. A subsidy occurs when airport funds flow, under all 
circumstances or conditionally, to a carrier with no goods or services 
being provided to the airport in return. For this purpose, air service 
is not considered a ``service'' provided to the airport. Any incentives 
where airport funds or assets (e.g., fuel) are transferred to a 
carrier, directly or indirectly (e.g., revenue or loan guarantees) 
would be regarded as prohibited subsidies.
    2. A waiver of costs that an airport sponsor would otherwise charge 
a carrier (e.g., landing fees or terminal rents) is not considered a 
subsidy, if for a limited duration consistent with the policies above. 
However, a waiver or assumption of costs that would normally be charged 
by a third party (ground handling, fuel, etc.) would be considered a 
subsidy and is not permissible for an ACIP. Incentives tied to specific 
customer service metrics (on-time performance, luggage delivery, etc.) 
are also not permissible.

B. Airport v. Non-Airport Revenues and Application to Subsidies and 
Other Revenue Guarantees

    1. Airport sponsors are prohibited from using airport funds to 
subsidize air carrier operations.
    2. A sponsor local government, state government, or other non-
Federal airport sponsor may use non-airport funds for subsidies and 
other uses that would be prohibited if airport funds were used. 
However, any use of funds would still need to meet Grant Assurance 
obligations prohibiting unjust discrimination.
    3. Local and state governments and community organizations not 
party to an AIP grant agreement, however, can use non-airport funds for 
incentives that would not be permissible for an obligated airport 
sponsor, including directing incentives toward a specific carrier and 
using their non-airport funds for revenue guarantees.
    a. If a local or state government or community organization chooses 
to fund a program to support new air service using non-airport funds, 
those funds may not be commingled with airport funds, and airport staff 
may not have responsibility for the handling and disposition of non-
airport funds. Any funds placed in an airport's account are treated as 
airport revenues. As long as community incentives are kept separate 
from airport funds, the community organization's funding would not be 
considered airport revenue and therefore not subject to its special 
requirements.
    b. Airport staff can provide technical assistance to non-airport 
entities regarding ACIPs that do not use airport revenue, where the 
non-airport entity, and not the airport sponsor, is the agency 
responsible for decisions on expenditure of the funds. The role of 
airport staff can be advisory, but the airport staff cannot be involved 
in the decision-making process or handle non-airport funds. The airport 
staff's assistance may include:
    i. Guidance on the economic viability of prospective markets;
    ii. Understanding of carrier business models and aircraft 
performance characteristics;
    iii. Information on the availability of the airport sponsor's ACIP 
to support the new service within the limits described in this policy;
    iv. Other types of technical assistance consistent with the intent 
and overall parameters of this section.

C. Marketing Incentives

    1. Airport sponsors are permitted to contribute to the marketing of 
new service, but airport funds must either flow directly to the 
marketing provider, or be provided to a carrier only after the carrier 
has paid the marketing provider and submitted an invoice to the airport 
for incentive-related marketing with supporting documentation.
    2. A marketing program must promote use of the airport. Use of 
airport funds for general economic development or for marketing and 
promotional activities unrelated to the airport is prohibited by 49 
U.S.C. 47107(k)(2)(B).

D. Incentives for Individual Travelers

    1. Airport sponsors are prohibited from offering cash incentives to 
travelers for flying a route, as this indirectly subsidizes the carrier 
serving that route.
    2. However, airport sponsors are allowed to offer coupons for food, 
parking or other benefits tied to general use of the airport, as long 
as the benefit is not restricted to passengers who fly a specific 
carrier or route.

IV. An ACIP May Not Result in an Increase in Charges for Non-
Participating Carriers or Other Aeronautical Users of the Airport

A. An ACIP May Not Increase Fees Charged to Non-Participating Carriers 
or Other Aeronautical Users and Tenants of the Airport Subject to the 
Requirement for Reasonable Fees Under 49 U.S.C. 47107(a)(1) and Grant 
Assurance 22

    1. The costs of an ACIP may not be passed on to non-participating 
carriers or other aeronautical users in any form. The costs of an ACIP 
include direct costs, such as marketing, and the general costs of 
airport operation and maintenance that are not covered by the carrier 
in an ACIP as a result of a reduction or waiver of fees.
    2. An acceptable ACIP will not result in an increase in the sponsor 
charges to non-participating carriers, i.e., on the charges that 
carriers would have paid in the absence of the incentivized service.
    3. For an airport sponsor with a residual fee methodology, an ACIP 
may not reduce the residual payment to non-participating carriers each 
year. An ACIP may not reduce any other payments or credits that would 
otherwise be received from the airport sponsor in the absence of the 
incentivized service.

V. An ACIP May Not Adversely Affect an Airport's Self-Sustaining Rate 
Structure, as Required by Grant Assurance 24

A. An ACIP Must Be Funded From a Source That Not Only Does Not Increase 
Rates for Non-Participating Parties, But Also Does Not Involve the Use 
of Funds Necessary for the Proper Operation and Maintenance of the 
Airport

VI. FAA Oversight/Administration

A. Restart of Previous Service

    1. Airport sponsors can use their own discretion when choosing 
whether to offer incentives for a carrier to restart service that the 
same carrier had offered previously but cancelled either due to 
extraordinary external circumstances (e.g., an extreme natural, 
manmade, or public health crisis, such as hurricanes, terrorism, or 
pandemic).
    2. In any event, discretion for service restart may not be used to 
extend an incentive beyond the limits provided in this policy.

B. FAA Review

    1. The FAA does not approve ACIPs. At the request of an airport 
sponsor or of an air carrier potentially affected by an ACIP, the FAA 
will review an ACIP

[[Page 85357]]

for compliance with the sponsor's Federal obligations.

C. Existing, New, and Modified Incentives

    1. Existing carrier incentives for which contracts are signed prior 
to the issuance date of this policy and up to 60 days thereafter, under 
programs that were in effect on the issuance date of this policy and 
complied with the FAA's previous policy guidance, may continue as 
implemented until they expire. All such existing incentives will expire 
within two years of the first flight that is eligible for an incentive.
    2. Incentives for which contracts are signed more than 60 days 
after the issuance date of this policy must conform to the guidance in 
this policy statement.
    3. Any new incentive program or modification of an existing 
incentive program after publication must comply with the requirements 
of this policy (i.e., without a 60-day grace period).

    Issued in Washington, DC.
Kevin C. Willis,
Director, Office of Airport Compliance and Management Analysis.
[FR Doc. 2023-26809 Filed 12-6-23; 8:45 am]
BILLING CODE P