Who Foots the Bill? The Funding Gap Holding Back Aerospace & Aviation Growth

Across the country, growth in unmanned aircraft systems (UAS), defense aviation, maintenance and advanced aerospace research is placing increased pressure on airports to provide the space needed to perform essential operations. Yet despite that demand, hangar development still remains one of the most difficult infrastructure projects to fund.

Ask anyone in the aviation or aerospace field, and they’ll tell you: Hangars are non-negotiable. They house aircraft, enable required testing and maintenance, support mission readiness and anchor entire aviation ecosystems. But unlike roads, utility depots or terminals, hangars fall into a gray area of financing.

Today, their construction is critical to economic growth, yet hangars are still often viewed as too specialized, expensive or too risky to justify traditional private development. That mindset is leaving many regions with a widening funding gap where aerospace companies need infrastructure, they often aren’t willing to fund, and public systems are uncertain how to make the investment work for everyone long term.

Public Investment as a Catalyst

Despite strong demand, private aerospace and aviation companies rarely take the lead on hangar construction. For many, tying up capital in this type of infrastructure simply doesn’t work with their operating model or scaling. There are a few reasons for this:

Mission First Mindset

For aerospace, defense, and advanced aviation companies, real estate is rarely the strategic priority. Mission execution is.

Programs are typically driven by federal contracts, research timelines or national security needs that can shift with little notice. Companies must be able to scale up, relocate or reconfigure operations quickly to align with new task orders, emerging technologies or evolving defense priorities. Owning a fixed, capital-intensive hangar can create friction rather than flexibility.

A multimillion-dollar hangar only delivers value if the mission remains stable long enough to justify it. If operational needs change, whether due to contract realignment, platform upgrades or geographic shifts, that owned asset quickly becomes a constraint instead of an advantage.

This reality is echoed across defense acquisition strategy, where agility and speed are emphasized over fixed infrastructure ownership. The Department of Defense has increasingly prioritized modularity and rapid deployment capabilities, which favor leased or publicly supported facilities over owned assets.

High Upfront Costs

Hangar construction is not comparable to standard industrial or warehouse development. These facilities require wide-span clearances, reinforced foundations, specialized door systems, higher ceiling loads, complex fire suppression systems and aviation-grade utilities. When coupled with apron access, taxiway connections and airfield compatibility, costs escalate quickly.

According to industry estimates, simple aviation hangar construction can range from around $60 USD to several hundred dollars per square foot. But for specialized hangars, this can easily exceed that ballpark depending on size, use and compliance requirements. That level of upfront capital can be difficult to justify for companies whose primary investments are better directed toward aircraft, workforce, R&D and mission systems.

From construction management of past HCPHC projects, we’ve seen the following costs for hangar development:

●       RESTORE Hangar cost $232/SF, which totaled 22,700 SF of hangar space that included parking, DoD compliant fire suppression systems and large door requirements. This project was supported by RESTORE grant funding and majority of local funds.

●       Corporate Hangar cost $163/SF, which totaled 12,500SF of hangar and office space that included parking, offices and basic hangar utilities. This project did not include large fire systems. Its development was funded through a state Multimodal grant and local funds.

●       General Aviation Hangar cost $176/SF, which totaled 5,226 SF of hangar and apron improvements with no office, parking or fire system. It was funded through a state Multimodal grant and local funds.

From a financial standpoint, leasing or occupying an existing hangar that already meets most operational requirements allows companies to preserve capital and fast-track operations to mission readiness. Minor retrofits are often far more attractive than absorbing the full cost and risk of ground-up development.

Uncertain Timelines

Beyond specific performance periods, aerospace and defense contracts are anything but guaranteed. Even long-running programs are subject to funding cycles, political shifts and evolving mission priorities. As a result, companies are naturally hesitant to commit to real estate investments with 20 to 30-year amortization outlooks.

Hangar ownership assumes long-term stability, but the reality is that program timelines can compress, expand or end entirely. When contracts change, companies may need to redeploy assets, consolidate operations or move closer to key partners or test facilities. Fixed infrastructure ownership can limit that mobility and increase stranded asset risk.

Realistically, the only way large-scale hangar development occurs is through the public sector, where development organizations can leverage the long recoupment time horizons of 20, 30, and 40 years. This also makes public or airport-owned hangars, where hangar space can adjust with program and tenant needs, far more attractive to private operators.

DOD Requirements

Facilities that support military aircraft operations face stricter regulatory and safety requirements than civilian aviation facilities. These can include enhanced fire suppression systems, on-site or nearby fire department support, secure access controls, hardened structures and compliance with Anti-Terrorism Force Protection (ATFP) standards.

For example, DoD and UFC (Unified Facilities Criteria) standards often require specialized fire protection systems for aircraft hangars, including foam-based suppression, increased water-supply capacity, and trained emergency-response personnel. These requirements significantly increase both construction and ongoing operational costs.

When layered on top of already expensive aviation construction, these compliance costs can make private ownership financially infeasible, especially when the facility may only be needed for the duration of a specific mission or contract.

This is why public investment plays such a critical role. When states and local entities invest in hangar development, they create revenue-generating public assets that can be repurposed repeatedly for new projects and partners. This lowers investment risk for incoming tenants by providing vital infrastructure that can adapt to changing goals and needs.

Paths to Funding Hangar Development

Recognizing this challenge, states are stepping in to help bridge the gap through a combination of grants, loans and public-private partnerships. In Mississippi, our potential funding tools include:

Gulf Coast Restoration Funds (GCRF)

Created in the wake of the BP Deepwater Horizon settlement by the MS Legislature in 2018, the GCRF fund helps support long-term economic and infrastructure recovery along the Gulf Coast’s six coastal counties. The Gulf Coast Business Council presented a Strategic Investment Opportunity Analysis in 2019 to offer guidance for future projects to increase economic competitiveness, quality of place, innovation, workforce and strategic infrastructure. The recommendations included focusing on infrastructure around Stennis Space Center and existing industry clusters such as aerospace and defense opportunities. 

In December 2025, the Mississippi Development Authority, which administers the GCRF funds, provided the MS Legislature with a letter of recommendation highlighting the need to invest in new hangars and aerospace facilities, citing high-growth market opportunities in aerospace and defense and the expansion of airport-based industries. For three consecutive years, HCPHC has been recommended by the Gulf Coast Advisory Board for an award to construct a new hangar facility at Site 01 at Stennis International Airport, which accomplishes all of these continued recommendations and opportunities.   

RESTORE Act Grants

Created in the wake of the Deepwater Horizon settlement, the RESTORE Act fund helps support long-term economic and infrastructure recovery along the Gulf Coast. While often associated with environmental restoration, these funds can also be used for projects that strengthen regional economic resilience.

Aviation infrastructure meets that requirement by supporting high-wage industries, workforce development, and long-term regional competitiveness. When applied strategically, RESTORE dollars can also help offset upfront construction costs that would otherwise deter development.

Strategic Multimodal Investments Fund (SMIF)

The Strategic Multimodal Investments Fund is intended to support infrastructure that strengthens Mississippi’s transportation network, including airports and airspace. SMIF can be used to advance aviation-related projects that improve access, capacity and economic connectivity, making it a strong candidate for supporting hangar construction when framed as economic infrastructure rather than just standalone buildings that only benefit private business.

Multimodal Transportation Improvement Program (MTIP)

MTIP focuses on transportation projects that enhance freight movement, logistics and economic development. For airports serving aerospace, defense or advanced aviation users, hangars are essential to keeping aircraft operational and supply chains moving.

By positioning hangar development as a functional extension of multimodal transportation infrastructure, MTIP funds can play a role in preparing airports for long-term aviation demand.

Mississippi Development Authority Airport Revolving Loan Fund

The Airport Revolving Loan Fund provides low-interest financing to airports for eligible capital improvements. Unlike grants, revolving loan funds are designed to recycle capital over time. This makes them particularly well-suited for revenue-generating assets such as hangars.

Lease revenue from tenants can be used to repay loans, allowing airports to expand infrastructure today while preserving flexibility for future projects. This model aligns well with the long development timelines common in aerospace and aviation.

 

Mississippi’s Opportunity

Our state has long been a top competitor in aerospace and aviation along the Gulf Coast. Assets like Stennis International Airport, Stennis Space Center and our proximity to critical defense infrastructure give us the type of ecosystem industry leaders seek to bring new projects and initiatives to life.

But available hangar space is the linchpin that brings it all together. Our next step is to shift the perception—and investment priorities— surrounding hangar development from “optional real estate” to “necessary economic infrastructure.”

By evolving our policies and investment strategies in this way, Mississippi can better compete nationally for aerospace and defense projects; reduce barriers for companies considering expansion or relocation; and position local airports as long-term hubs for growth and innovation.

The Cost of Inaction

When it comes to aviation infrastructure, what’s saved today by not investing is lost tomorrow as the industry pendulum swings, and once viable prospects go looking elsewhere for the real estate and resources we failed to procure. It’s an environment with mounting competition and tough margins. But the reality is, regions without available space risk losing business, delaying growth and ultimately missing out on significant federal and private investments.

For public economic development organizations, this isn’t a “damned if you do, damned if you don’t” scenario, though. Experience tells us that public investment outcomes fare much better than private investment in the long term, especially with flexible options for income generation that outlive the many tenants who may occupy space over years of use.

A publicly funded hangar becomes a long-term asset for its region, drawing in yearly revenue, supporting jobs and providing valuable space to anchor growing industries. The question is, are we willing to rethink how they’re funded and commit to the work?

Drive the Future of Aviation in Hancock County

Hangar development is a strategic investment in jobs, competitiveness and long-term economic resilience. That’s why Hancock County is actively working to expand aviation infrastructure that supports the growth of leading industries across the Gulf Coast.

If you’re interested in learning more about current projects, funding strategies or opportunities to partner in hangar investment, our team is ready to connect.

Start the conversation today to explore how strategic hangar development can help move Mississippi’s aviation economy forward.