Congress must overcome predictable PFC opposition to spur needed airport upgrades
© GIANRIGO MARLETTA/AFP/Getty Images

The future of a local airport user fee known as the passenger facility charge (PFC) that funds critical airport upgrades has long been the subject of fierce debate between U.S. airlines and airports, and it’s back on the table as part of the infrastructure framework and principles outlined by House Democrats this week. Transportation and Infrastructure Chairman Peter DeFazioPeter Anthony DeFazioHouse Democrats eyeing much broader Phase 3 stimulus Hillicon Valley: HHS hit by cyberattack amid coronavirus outbreak | Senators urge FCC to shore up internet access for students | Sanders ramps up Facebook ad spending | Dems ask DHS to delay Real ID deadline Top Transportation Dem warns airlines could face financial hit 'worse than 9/11' MORE (D-Ore.) deserves immense credit for championing enactment of PFC legislation three decades ago and advocating for this overdue update.

The nation’s airlines – nearly all of which have perfected the art of imposing “ancillary” fees on passengers – vigorously oppose providing local airport authorities the option of adjusting the local PFC even by a few dollars to keep pace with inflation and fund critical projects. Never mind that many carriers routinely charge passengers $30 or more to check a bag or the fact that U.S. airlines collect some $8 billion in bag and ticket fees a year. The distinction for the airlines, apparently, lies in what the fees are used for: those that go to the carrier’s bottom lines are good; but fees of even a few dollars to pay for airport upgrades and increase competition are to be avoided.

The disagreement between airlines and airports isn’t surprising given the different imperatives each has when it comes to infrastructure investment. The airlines must be responsive to their shareholders and operate with an eye on the upcoming quarterly financial report. Individual airlines want to control where airport investments are made to serve their interests and their customers rather than their competitor’s interests and customers.

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In contrast, airports as public entities must build and support facilities to serve all airlines and travelers not only for the next quarter but decades into the future. Airport executives are driven by the need to prepare for future growth, enhance services to passengers, encourage competition which allows for greater consumer choice and lower prices, and ensure the safety and security of their facilities. The PFC is a critical tool for meeting each of these goals.

Recently, an independent study commissioned by Congress and conducted by the nonpartisan RAND Corporation provided additional context for policymakers. RAND recommended that the federal statutory cap on local PFCs be increased with future indexing to account for construction inflation – which is what was included this week in the infrastructure principles outlined by DeFazio and the Democratic leadership in the House.

Congress last adjusted the PFC cap to $4.50 in 2000. Since then, inflation has significantly reduced purchasing power. Today’s PFC buys about half of what it did 20 years ago. Airports are advocating for a modest increase in the PFC cap to $8.50 with indexing for inflation to help repair aging facilities and accommodate rising demand. Does anyone realistically believe that they could operate a family budget today with the same amount of money that had 20 years ago?

As anyone who has traveled lately knows, airport terminals are bursting at the seams. The FAA forecasts that the nation’s largest airports will see 30 percent more passengers by 2030 with growth at small and medium airports also increasing significantly. The question of how airports will handle tens of millions of additional travelers without increased resources is a pressing one.

While airlines do invest in some airport facilities that serve their needs, many airports – particularly smaller ones – aren’t likely to see airline-funded upgrades anytime soon. The airlines also argue that airports can pile on more debt to pay for upgrades, but that significantly increases project costs and the timeline for completion. And, debt financing isn’t an option for many smaller airports. Additional PFC flexibility would give airports of all sizes the self-help they need to pay for upgrades in a fiscally responsible manner without the need for an influx of federal funding.

The call from DeFazio and House Democrats to update the antiquated PFC cap is exactly what’s needed to spur investments in terminals and other critical airport facilities. The predictable airline opposition should do nothing to slow the House and Senate from quickly turning these “principles” into public law.

Todd Hauptli is president and CEO of the American Association of Airport Executives (AAAE).