Airports Need the Passenger Facility Charge
Airports are a critical component of our global 21st century economy, providing a $1.4 trillion economic impact and generating 11.5 million jobs, which is why we can no longer sit by and watch as billions of dollars in airport infrastructure needs go unmet.
According to a recent study, airports are facing more than $128 billion dollars in unmet infrastructure needs over the next 10 years — the greatest need being terminal construction and expansion.
The primary method for funding airport infrastructure needs is through the passenger facility charge (PFC). The PFC was created by the federal government in 1992, and severely restricts airports ability to meet their infrastructure needs on their own. Making the situation worse, the federally imposed cap on the user fee has not been adjusted for inflation for 20 years.
As a result, airports are forced to turn to federal taxpayer subsidies or negotiate with airlines — who demand long-term exclusive gate deals in exchange for their support. These deals allow airlines to prevent competitors, particularly low-cost carriers, from servicing an airport. This crony capitalism allows airlines to keep ticket prices artificially high. Airlines win, but consumers and taxpayers lose.
Last Congress, Rep. Peter DeFazio (D-OR) and Rep. Thomas Massie (R-KY) introduced legislation that would get the government out of the airport business and allow airports to function as businesses by uncapping the federally mandated — and artificially low — user fee.
Modernizing the PFC would put tens thousands of Americans to work and allow airports in to upgrade their facilities and improve their air service offerings — potentially bringing in new carriers that would increase competition among airlines and lower the costs of airfare to consumers.
Instead of having an honest debate about the infrastructure needs at our airports, the big airlines and their allies have spent millions of dollars trying to deceive the American people and government leaders about what the PFC is and what it does.
The airlines and their allies criticize the PFC as a tax. But there is just one little catch: it’s not a tax.
Marc Scribner, of the free market Competitive Enterprise Institute and one of the nation’s more foremost conservative experts on aviation, penned a scathing article, debunking efforts to call the modernization of the PFC a “tax increase.”
The federal cap on the PFC is a price control imposed on airports. When a government price ceiling like the PFC is raised or eliminated, that is not a price increase. It simply increases pricing freedom. The PFC is also not a tax; rather, it is a classic example of a user fee. The revenue collected goes directly to the charging airports and is dedicated in law for narrow airport facility improvements. It does not go to the federal treasury to be appropriated by politicians in Washington to programs unrelated to airport infrastructure.
Indeed, anti-tax conservative groups like the Heritage Foundation, FreedomWorks, Citizens Against Government Waste and the Competitive Enterprise Institute have all supported efforts to lift the federal cap on the PFC.
The truth is that the PFC isn’t a tax and the airlines know it. They claim it is a tax because they don’t want to defend the real reason for their opposition to any effort to modernize the PFC and give airports greater ability to meet their infrastructure needs. Airlines know the status quo works to their benefit:
When airports are constrained in bankrolling their own improvements, they often must turn to large incumbent airlines. In exchange for financing these needed improvements, the airlines then demand long-term exclusive use gate leases, which they use to keep low-cost competitors from accessing the airport. Gate access limitations have been estimated to raise U.S. airfares by more than $4.4 billion per year (in 2005 dollars), a significantly larger amount than that of the total annual revenue generated by PFCs across the country.
We should have a real debate about the needs facing our airports and the options available to meet those needs. What we do not need is lies and obfuscation. Lawmakers should sit down with all of the stakeholders from the aviation industry and determine a way forward without paying attention to the spin from the big airlines and their allies.
Christopher R. Barron is a conservative strategist and the President of Right Turn Strategies.