Airports, vitally important to our industry and to the U.S. economy, are not commanding center stage in the current discussion about improving our nation’s infrastructure. That’s for good reason. Unlike bridges, roads or even highways, airports enjoy a variety of funding sources for improvement projects.
The lack of a crisis in airport funding hasn’t prevented some from trying to invent one, however. Seeing an opportunity, airports want to nearly double the Passenger Facility Charge (PFC) assessed on travelers—referred to by many as the airport tax—and allow it to automatically increase every year. This scheme ignores the fact that airports already have access to the funds they need for improvement projects, well into the future. Moreover, this increase would fall squarely on the backs of air travelers who are already overburdened with government imposed taxes and fees.
Make no mistake. U.S. airlines strongly support necessary airport capital improvement projects across the country. Airlines, along with our airport partners, are investing tens of billions of dollars in airport infrastructure. Since 2008, more than $70 billion in capital improvement projects have been completed, are underway or have been approved by U.S. airlines and their airport partners at the country’s largest 30 airports alone, without any increases in the PFC. Improvements include new runways at Fort Lauderdale, Chicago (O’Hare), Washington (Dulles), Seattle and Charlotte; new international facilities at Atlanta and Los Angeles; and several new renovated terminals including Miami, Las Vegas, Houston and San Francisco. Development is also occurring at smaller airports including, runway projects at Erie, Dayton and Sioux Falls and terminal projects at Greenville-Spartanburg, Portland (Maine), Wichita and Reno-Tahoe.
The same airports that are calling for an increase in the PFC cap are flush with cash and already receive billions of dollars from passengers and the government alike. Airports have investment-grade credit and have ample access to the bond market to raise money. U.S. airports currently hold more than $11 billion dollars in unrestricted cash and assets and collected nearly $24.5 billion in revenue in 2013, a 52 percent increase per passenger since 2000.
The PFC, which airports claim is too low, in fact reached $2.9 billion in 2014 (per FAA estimates) and is rebounding to the all-time high set in 2006. With an uncommitted balance of $6 billion in the federal Airport and Airway Trust Fund (AATF) - the highest level since 2001 - funding for the Airport Improvement Program is secure and will continue to provide funding for airport projects for years to come.
Airports have the resources they need, yet air passengers already pay too much of their hard earned money to the government in the form of taxes and fees. Raising the airport tax would take total Federal taxes and fees from $63 on a typical $300 domestic round-trip ticket - approximately 21 percent of the total cost – to $79 or 26 percent of the total cost. Increasing the airport tax, and allowing it to automatically increase every year, is the latest attempt to extract more money from passengers. Voters aren’t happy about this idea. A recent poll of 1,000 voters conducted by the Tarrance Group showed that a full 82 percent of voters oppose nearly doubling the PFC and tying future increases to inflation.
Air travel is often an optional choice. Increasing the cost of airline tickets through an increased airport tax will make fewer people choose to fly. That hurts passengers, airlines, airports and the entire U.S. economy. In fact, the U.S. Government Accountability Office (GAO) recently found that increasing the PFC cap would slow passenger growth and reduce revenues in the Airport and Airway Trust Fund. This report confirms that further increases in government-imposed taxes and fees would dampen demand for air travel, and along with it, reduce U.S. economic activity.
Recent Congresses—under Democratic and Republican control—have held the line on a PFC increase. They did so because passengers, airlines and the U.S. economy cannot afford higher taxes and fees, and because airports are capable of addressing capital needs through existing revenue streams. The same is true today, if not more so.
Airports have plenty while passengers are taxed enough. Let’s stick to what works. Congress should hold the line and keep the PFC cap where it is.
Calio is president and CEO of Airlines For America.