diff --git a/tools/airship-in-a-pod/README.md b/tools/airship-in-a-pod/README.md
index 5785e452e..29433d0f2 100644
--- a/tools/airship-in-a-pod/README.md
+++ b/tools/airship-in-a-pod/README.md
@@ -163,14 +163,15 @@ Airship-in-a-pod produces the following outputs:
 * A tarball containing the generated ephemeral ISO, as well as the
   configuration used during generation.
 
-These artifacts are placed at `ARTIFACTS_DIR` (defaults to `/opt/aiap-artifacts`).
+These artifacts are placed at `ARTIFACTS_DIR` (defaults to `/opt/aiap-files/artifacts`).
 
 ## Caching
+#TODO: Need to review this.
 
 As it can be cumbersome and time-consuming to build and rebuild binaries and
 images, some options are made available for caching. A developer may re-use
 artifacts from previous runs (or provide their own) by placing them in
-`CACHE_DIR` (defaults to `/opt/aiap-cache`). Special care is needed for the
+`CACHE_DIR` (defaults to `/opt/aiap-files/cache`). Special care is needed for the
 caching:
 
 * If using a cached `airshipctl`, the `airshipctl` binary must be stored in the
diff --git a/tools/airship-in-a-pod/base/Dockerfile b/tools/airship-in-a-pod/base/Dockerfile
index 29b1a0aba..c36d439ed 100644
--- a/tools/airship-in-a-pod/base/Dockerfile
+++ b/tools/airship-in-a-pod/base/Dockerfile
@@ -4,10 +4,10 @@ FROM ${BASE_IMAGE}
 SHELL ["bash", "-exc"]
 ENV DEBIAN_FRONTEND noninteractive
 
-ARG CACHE_DIR=/opt/aiap-cache
+ARG CACHE_DIR=/opt/aiap-files/cache
 ENV CACHE_DIR=$CACHE_DIR
 
-ARG ARTIFACTS_DIR=/opt/aiap-artifacts
+ARG ARTIFACTS_DIR=/opt/aiap-files/artifacts
 ENV ARTIFACTS_DIR=$ARTIFACTS_DIR
 
 # Update distro and install common reqs
diff --git a/tools/airship-in-a-pod/examples/airshipctl/kustomization.yaml b/tools/airship-in-a-pod/examples/airshipctl/kustomization.yaml
index 3f9eee724..431f20441 100644
--- a/tools/airship-in-a-pod/examples/airshipctl/kustomization.yaml
+++ b/tools/airship-in-a-pod/examples/airshipctl/kustomization.yaml
@@ -15,6 +15,9 @@ kind: Kustomization
 bases:
 - ../base
 
+resources:
+- pv.yaml
+
 patchesJson6902:
 - target:
     version: v1 # apiVersion
diff --git a/tools/airship-in-a-pod/examples/airshipctl/pv.yaml b/tools/airship-in-a-pod/examples/airshipctl/pv.yaml
new file mode 100644
index 000000000..8a3e00304
--- /dev/null
+++ b/tools/airship-in-a-pod/examples/airshipctl/pv.yaml
@@ -0,0 +1,47 @@
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#     http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+---
+apiVersion: v1
+kind: PersistentVolume
+metadata:
+  name: aiap-pv-files-volume
+spec:
+  capacity:
+    storage: 100Gi
+  volumeMode: Filesystem
+  accessModes:
+  - ReadWriteMany
+  persistentVolumeReclaimPolicy: Delete
+  storageClassName: standard
+  local:
+    path: /var/local-path-provisioner
+  nodeAffinity:
+    required:
+      nodeSelectorTerms:
+      - matchExpressions:
+        - key: kubernetes.io/hostname
+          operator: In
+          values:
+          - kind-control-plane
+---
+apiVersion: v1
+kind: PersistentVolumeClaim
+metadata:
+  name: aiap-pv-files-claim
+spec:
+  storageClassName: standard
+  accessModes:
+    - ReadWriteMany
+  resources:
+    requests:
+      storage: 100Gi
diff --git a/tools/airship-in-a-pod/examples/airshipctl/replacements.yaml b/tools/airship-in-a-pod/examples/airshipctl/replacements.yaml
index de3b871d2..149431b19 100644
--- a/tools/airship-in-a-pod/examples/airshipctl/replacements.yaml
+++ b/tools/airship-in-a-pod/examples/airshipctl/replacements.yaml
@@ -61,28 +61,29 @@
 # that it should be the same across containers
 - op: replace
   path: "/spec/containers/4/env/2/value"
-  value: /opt/aiap-artifacts
+  value: /opt/aiap-files/artifacts
 - op: replace
   path: "/spec/containers/5/env/1/value"
-  value: /opt/aiap-artifacts
+  value: /opt/aiap-files/artifacts
 - op: replace
   path: "/spec/containers/6/env/1/value"
-  value: /opt/aiap-artifacts
+  value: /opt/aiap-files/artifacts
 
 # This is the location on the host machine of the cache directory. Note that it
 # should be the same across containers
 - op: replace
   path: "/spec/containers/4/env/0/value"
-  value: /opt/aiap-cache
+  value: /opt/aiap-files/cache
 - op: replace
   path: "/spec/containers/5/env/0/value"
-  value: /opt/aiap-cache
+  value: /opt/aiap-files/cache
 - op: replace
   path: "/spec/containers/6/env/0/value"
-  value: /opt/aiap-cache
+  value: /opt/aiap-files/cache
 # Set true to use a cached airshipctl binary
 - op: replace
   path: "/spec/containers/4/env/1/value"
+  # value: $(USE_CACHED_AIRSHIPCTL)
   value: "false"
 # Set true to use a cached ephemeral iso
 - op: replace
diff --git a/tools/airship-in-a-pod/examples/base/airship-in-a-pod.yaml b/tools/airship-in-a-pod/examples/base/airship-in-a-pod.yaml
index c1e3ae0c2..255269613 100644
--- a/tools/airship-in-a-pod/examples/base/airship-in-a-pod.yaml
+++ b/tools/airship-in-a-pod/examples/base/airship-in-a-pod.yaml
@@ -223,11 +223,11 @@ spec:
       - /entrypoint.sh
     env:
       - name: CACHE_DIR
-        value: /opt/aiap-cache
+        value: /opt/aiap-files/cache
       - name: USE_CACHED_AIRSHIPCTL
         value: "false"
       - name: ARTIFACTS_DIR
-        value: /opt/aiap-artifacts
+        value: /opt/aiap-files/artifacts
       - name: AIRSHIPCTL_REPO_URL
         value: https://opendev.org/airship/airshipctl
       - name: AIRSHIPCTL_REPO_REF
@@ -245,10 +245,8 @@ spec:
     volumeMounts:
       - name: tmp
         mountPath: /tmp
-      - name: cache
-        mountPath: /opt/aiap-cache
-      - name: artifacts
-        mountPath: /opt/aiap-artifacts
+      - name: aiap-files
+        mountPath: /opt/aiap-files
       - name: status
         mountPath: /tmp/status
       - name: var-run-docker
@@ -269,9 +267,9 @@ spec:
       - /entrypoint.sh
     env:
       - name: CACHE_DIR
-        value: /opt/aiap-cache
+        value: /opt/aiap-files/cache
       - name: ARTIFACTS_DIR
-        value: /opt/aiap-artifacts
+        value: /opt/aiap-files/artifacts
       - name: USE_PROXY
         value:
       - name: no_proxy
@@ -281,10 +279,8 @@ spec:
       - name: https_proxy
         value:
     volumeMounts:
-      - name: cache
-        mountPath: /opt/aiap-cache
-      - name: artifacts
-        mountPath: /opt/aiap-artifacts
+      - name: aiap-files
+        mountPath: /opt/aiap-files
       - name: status
         mountPath: /tmp/status
       - name: tmp
@@ -311,9 +307,9 @@ spec:
       - /entrypoint.sh
     env:
       - name: CACHE_DIR
-        value: /opt/aiap-cache
+        value: /opt/aiap-files/cache
       - name: ARTIFACTS_DIR
-        value: /opt/aiap-artifacts
+        value: /opt/aiap-files/artifacts
       - name: USE_CACHED_ISO
         value: "false"
       - name: AIRSHIP_CONFIG_PHASE_REPO_URL
@@ -336,10 +332,8 @@ spec:
         value:
 
     volumeMounts:
-      - name: cache
-        mountPath: /opt/aiap-cache
-      - name: artifacts
-        mountPath: /opt/aiap-artifacts
+      - name: aiap-files
+        mountPath: /opt/aiap-files
       - name: status
         mountPath: /tmp/status
       - name: tmp
@@ -367,13 +361,23 @@ spec:
       - name: status
         mountPath: /tmp/status
 
+  initContainers:
+  - name: init-aiap-files
+    image: ubuntu:20.04
+    command:
+      - bash
+      - -cex
+      - |
+        mkdir -p /opt/aiap-files/artifacts
+        mkdir -p /opt/aiap-files/cache
+    volumeMounts:
+      - name: aiap-files
+        mountPath: /opt/aiap-files
+
   volumes:
-    - name: cache
-      hostPath:
-        path: /opt/aiap-cache
-    - name: artifacts
-      hostPath:
-        path: /opt/aiap-artifacts
+    - name: aiap-files
+      persistentVolumeClaim:
+        claimName: aiap-pv-files-claim
     - name: status
       emptyDir: {}
     - name: dev