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CEI Leads Free-Market Coalition to Dispel Passenger Facility Charge Myths

Today, CEI and seven other free-market organizations sent a letter to members of Congress aimed at dispelling myths circulating about the airport passenger facility charge (PFC).

The PFC is a local airport user fee authorized by Congress as a narrow exemption to the Anti-Head Tax Act of 1973, which generally prohibits airports from charging air traveler user fees. Last raised in 2000, the current statutory cap is $4.50 per enplanement for a maximum of two enplanements per one-way itinerary. It is widely supported by free market transportation analysts as an alternative to the Airport Improvement Program, a federal airport grant program funded by aviation taxes.

Our letter makes the following points:

  • The PFC is a user fee, not a tax. The charge is imposed on passengers and the revenue is directed towards airport improvements that benefit those passengers. It is collected by airlines for the specific airports that impose the fee. No PFC revenue touches the federal treasury.
  • Empirical research has found that PFC use is associated with increased airport productive efficiency while Airport Improvement Program use is negatively associated with airport efficiency.
  • Airports’ cash reserves are rainy day funds required by credit rating bureaus to maintain investment-grade credit ratings. These should not be raided to fund normal, predictable business activities.
  • Increasing airport financing flexibility through a modernized PFC would benefit air travelers through increased airline competition. PFC revenue is more likely to be used to expand common use gates that can be used to bring new carriers to the airport and dilute incumbent airline market power.
  • Limited gate availability at large and medium hubs has been estimated to increase airfares by billions of dollars every year, dwarfing total nationwide PFC collections.

Read the full letter here, which was also signed by the Reason Foundation, FreedomWorks, Council for Citizens Against Government Waste, Taxpayers Protection Alliance, National Black Chamber of Commerce, 60 Plus Association, and Center for Freedom and Prosperity.

For more information on the benefits of a modernized PFC, see my March testimony before the House Transportation and Infrastructure Committee.