The runway must be cleared by Sept. 30 for takeoff of the Federal Aviation Administration (FAA) reauthorization — but even a civil approach appears daunting at this point.
FAA reauthorization faces contentious negotiations in Congress largely due to opposing U.S. House and Senate proposals related to the FAA’s oversight of air traffic control.
But there’s also another aviation-related issue mired in murkiness that’s facing tough negotiations and dividing parties externally and internally: the proposal to raise the cap on the passenger facility charge (PFC).
The PFC is the funding mechanism used by airports to charge passengers extra on their originating tickets to pay for airport improvements and other projects.
Interestingly, the PFC increase idea isn’t part of the FAA reauthorization bills. It was lumped into the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act of 2018, S. 1655, which Senate appropriators approved July 27 in committee.
Airlines for America (A4A), the Washington, D.C., trade group that lobbies on behalf of many major airlines, went so far as to call the Senate’s proposal a “massive secret tax hike.”
As part of the Senate’s appropriations bill, the PFC proposal would lift the cap from the current airport charge of up to $4.50 per originating ticket to an $8.50 max per ticket. At the same time, the Senate’s funding bill also would increase funding by $250 million to $3.6 billion for the Airport Improvement Program (AIP), which provides direct federal funds for airport infrastructure improvements.
Airport infrastructure improvements, in fact, are exactly why airports are lobbying for the PFC cap increase, which they refer to as a user fee, not a tax increase. They want the higher PFC cap to help cover the estimated $100 billion in projected costs they face over the next five years for federally approved infrastructure projects — and besides, the airports add, the cap hasn’t been changed in 17 years. For that matter, neither has the AIP; it’s been stagnant at $3.35 billion since 2012, the airports say.
President Donald Trump is against raising the PFC cap. Commercial airlines bemoan it as another unnecessary consumer tax. The House has remained fairly silent on the measure, choosing instead to focus on spinning off air traffic control operations from the FAA into a private, not-for-profit corporate entity. And a separate House transportation spending proposal does not include a PFC increase.
Many others in Washington, D.C., come down squarely against the PFC increase idea.
“We have never heard from a passenger who feels they should pay more taxes to use the airport,” Charles Leocha, chairman of Travelers United, a nonpartisan, nonprofit membership organization representing consumers, told Transportation Today.
“Raising the PFC is just like raising airfares. Every increase lowers demand,” Leocha said.
Americans for Tax Reform, whose founder and president Grover Norquist has considerable political clout with the GOP congressional leadership, also has repeatedly called the proposed PFC cap increase an unnecessary tax increase on air passengers that would raise their ticket prices.
And airline passengers already pay $4.50 every time they fly and $9.00 on connection flights that Leocha says goes directly to the airports. “Plus, there are segment fees, airport rental car facility charges, parking fees, etc., that consumers pay, not the local community,” he said, adding that 95 percent of airport costs already get covered by consumers.
Nicholas Calio, A4A’s president and CEO, agreed and said airline passengers already pay over $20 billion a year in taxes for the tickets they purchase.
“Adding another $3.2 billion tax hike on American travelers simply cannot be justified,” Calio said in a statement.
“The truth of the matter is that airports are flush with cash,” Calio added. “It is disingenuous at best for Congress to repeatedly saddle traveling families and businesses with tax-hike after tax-hike while airports are sitting on billions in unused funds.”
Congress created the PFC in 1990 to provide airports another financing option in addition to grants, bonds and airport revenues. Since the PFC was implemented in 1992, most airports have charged the $4.50 maximum opting for the funding mechanism that so far has collected a total of more than $50 billion, according to FAA data up to 2016.
Leocha suggested that the regions that are benefiting from the airport should pay their fair share.
“Though the airport municipalities are crying for more money, they refuse to create any kind of airport tax zone where they can collect taxes from those benefitting directly from the airport — nearby building owners, parking lot owners, hotels, etc. Even the municipal bonds are paid off using PFCs and that’s simply not fair,” Leocha said.
Leocha noted that the Senate appropriations committee language in S. 1655 allows the municipalities to take the easy way out rather than working with their regions that benefit from the airport-related economies.
And the Senate bill doesn’t help the airline industry at all, he said. “The airlines have shown that airports have excellent bond ratings, can raise money easily, and that there is a multi-billion-dollar surplus in the current airport funds.”
Michael Sargent, transportation policy analyst at the conservative think tank, the Heritage Foundation, however, thinks the FAA has a heavy hand in funding and regulating airports, in turn diverting billions of tax dollars away from the airports that fliers use the most to the ones most fliers will never see.
“A superior alternative would be to decrease the cumbersome federal management of airports and unleash them to operate as independent businesses,” Sargent wrote in an op-ed this spring, adding that the better and cheaper solution “is to get the federal government off airports’ backs.”
And the best way to do that, Sargent told Transportation Today, is to lift the PFC cap and let the airports raise their own funds.
But because the PFC cap increase idea is tucked into a Senate spending bill, Sargent said he’s not so sure it will move forward.
“I don’t see it getting through in any meaningful way,” he said. “It’s so controversial that it’s unlikely to make it into any long-term funding legislation.
“But the way things have been going in Washington,” Sargent added, “I could be wrong.”