President Trump has vowed to upgrade the country's "third-world" airports in an infrastructure package — and the Senate is exploring a potential funding tool that could help him do just that.
A Senate panel approved a proposal this month that would raise the federal cap on the Passenger Facility Charge (PFC) that airports can charge passengers to pay for facility improvements and other projects.
Supporters of the funding mechanism say it aligns perfectly with Trump's infrastructure goals because it wouldn't cost the federal government a dime and could spur more private sector investment.
But the passenger fee increase has divided conservative groups, faces fierce pushback from the airline industry and has been labeled by critics as a “tax increase,” which could damage its chances politically.
“There is some opposition to it among the airlines. But there’s a large backlog in infrastructure projects, and the fee has not been increased for 17 years,” Sen. Susan CollinsSusan Margaret CollinsEmanuel to take hot seat in Senate confirmation hearing Overnight Health Care — Presented by Carequest — FDA moves to sell hearing aids over-the-counter Rachel Levine sworn in as first openly transgender four-star officer in health corps MORE (R-Maine), chairwoman of the Appropriations transportation subcommittee, told reporters.
Currently, airports can charge passengers up to $4.50 per flight segment to help finance federally approved infrastructure projects. That includes efforts to expand terminals, upgrade bathrooms, improve security checkpoints and reduce airport noise.
Airports have been pressing Congress for years to remove or raise the cap on the fee, which they say would help them attract more private investors, speed up project delivery and address an estimated $100 billion in infrastructure needs over the next five years.
But it wasn’t until recently that the idea gained some traction in the Senate. The Appropriations Committee approved a spending bill for fiscal 2018 that would increase the maximum PFC to $8.50 per ticket.
Kevin Burke, president and CEO of Airports Council International-North America, attributed the PFC proposal’s inclusion in the spending bill to a heavy lobbying effort on Capitol Hill. Part of Burke's strategy has involved changing the messaging around the passenger fee by calling it a user fee instead of a tax increase.
Burke met with Collins and other lawmakers to sell them on the idea, and a group of bipartisan senators agreed to push for the idea in a spending bill.
“Neither bill had a PFC increase in it, but the Appropriations Committee had a number of members who were very strongly lobbied by their hometown airports, to say, ‘We’ve got to figure out a way to get this done,’ ” he said. “So we were successful to get a four dollar increase, which is beyond the wildest dreams of our members.”
Earlier this year, Burke discussed the passenger fee with Transportation Secretary Elaine Chao and even directly raised the issue with Trump during a meeting at the White House with the aviation industry.
Chao seemed open to the idea, saying all funding options are on the table, according to Burke. Trump, however, expressed concern that airline tickets could get too expensive. The PFC issue was not addressed in the White House’s budget request.
But now, supporters are hoping the Senate panel’s stamp of approval for the increase will send a clear signal to the Trump administration as it searches for ways to pay for the president’s $1 trillion infrastructure package, which is likely to be the biggest hurdle for Trump's rebuilding effort.
“It’s a big deal. It’s a momentum builder for us,” Burke said. “We can say, ‘Look, the Senate unanimously put this in, there’s got to be something right about this.’ ”
Trump has long promised to upgrade U.S. roads, bridges, airports and other public works, often describing American airports as “third-world.”
But Trump has emphasized that state and local governments in the U.S. have become too reliant on the federal government for a handout, saying they should become more self-sufficient or seek help from the private sector.
That’s where Burke’s pitch comes in: Instead of the government picking up the tab, airports could raise more money for projects on their own if they aren’t constrained by the PFC cap. Having more capital available also makes airports generally more attractive for public-private partnerships.
That argument is exactly why some libertarian, conservative and good-government groups have endorsed raising the PFC, including the Competitive Enterprise Institute, the Heritage Foundation, the Tax Foundation and FreedomWorks.
“If an industry group is offering a clean way to do this, an infusion of money to help fix infrastructure, why wouldn’t you go for it?” Burke said.
But not every conservative group is onboard with the idea. Americans for Tax Reform, which is run by Grover Norquist and has significant sway with GOP leadership, has long been opposed to any increase in the passenger fee because the group says it would create an added tax burden on travelers.
Airlines for America, a trade group representing most of the nation’s major airlines, also slammed the latest Senate spending bill for including the proposal and called it a “massive secret tax hike.”
“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,” Nicholas Calio, Airlines for America’s president and CEO, said in a statement.
“The truth of the matter is that airports are flush with cash. 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.”
Republican opposition to tax hikes could hamstring efforts to move the PFC proposal over the finish line in Congress, despite newfound support from Senate appropriators. Other committees have still shown a reluctance to endorse the idea, with lawmakers opting to leave it out of a long-term reauthorization of the Federal Aviation Administration.
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But Burke said more Republicans have been warming up to the idea in recent years, and he believes that presidential support for lifting the cap could further move the needle.
When pressed on whether she thought a PFC increase could end up in Trump’s infrastructure bill, Collins acknowledged that it is a possibility.
“It could be, since they’re looking for pay-fors and since airports are an important part of infrastructure,” Collins said. “So we’ll just have to see what happens.”