The DeFazio/Massie bill would eliminate the statutory cap on the passenger facility charge (PFC), a local airport user charge currently limited to $4.50 per enplanement. In exchange for being able to set their PFC above $4.50, airports would be required to give up their Airport Improvement Program (AIP) grants, allowing DeFazio/Massie to reduce annual AIP funding from $3,350,000,000 to $2,950,000,000—annual savings of $400 million.
As CEI has noted in the past, uncapping the PFC would grant airports additional freedom to make their own investment decisions and provide relief to federal taxpayers. Increasing airports’ ability to self-finance improvements would also enhance airline competition, as one consequence of the federal restrictions on airport financing is that major airlines have been able to secure long-term exclusive- or preferential-use gate leases in exchange for funding airport improvements. The legacy carriers then use their lease holdings to limit competitors’ entrance into the market.
Ideally, this bill wouldn’t be needed. The PFC only exists because Congress in 1973 outlawed airport user fees under the Anti-Head Tax Act. The PFC was developed during the Reagan administration and first formally proposed by the George H.W. Bush administration as a bipartisan compromise.
From a free market perspective, the best solution would be to repeal the Anti-Head Tax Act and the PFC’s enabling legislation, completely eliminating federal control over local airport financing decisions. Unfortunately, this is not politically feasible, at least for the time being. This is why groups such as the conservative Heritage Foundation and libertarian Reason Foundation recognize that uncapping the PFC is the first place to start in reforming airport financing and governance in the U.S.