Earlier today, Rep. Peter DeFazio (D-OR), the ranking member of the House Transportation and Infrastructure Committee, and committee member Rep. Thomas Massie (R-KY) announced a bill that would uncap the airport passenger facility charge (PFC), which would allow airports to charge passengers greater than the current $4.50 per enplanement fee.
The bill would also cut $400 million from Airport Improvement Program (AIP) grants. In exchange for the ability to charge above $4.50 per enplanement if they so choose, large hubs would need to forgo AIP funds.
CEI and a number of other libertarian and conservative groups—as well as good-government center-left groups—have been vocal supporters of PFC modernization. We view it as a local user charge—not a tax, as some opponents have falsely claimed. Only passengers are charged and passengers are the beneficiaries of the airport improvements PFCs generate. This is the classic users-pay/users-benefit definition of a user fee. Many airports are also reaching their debt limits, and PFCs can provide a revenue stream for bonds, allowing airports to re-enter the debt market and finance needed improvements.
Further, the PFC can help promote airline competition—a reason why many U.S. airlines oppose allowing airports to charge local passenger user fees. When airports are constrained in their ability to self-finance, they must frequently turn to their major airline customers to fund needed improvements. In exchange for their financial aid, major airlines often demand long-term exclusive-use gate leases, which they can then leverage as underused capacity to prevent additional low-cost competing airlines from servicing the airport. One study estimated that limited gate availability at U.S. airports resulted in air travelers paying $4.4 billion in higher airfares (in 2005 dollars).
Given President Trump’s interest in pursuing alternative financing of infrastructure instead of traditional federal funding, the PFC should be a no-brainer for the administration and Congress looking for solutions that promote infrastructure development without emptying taxpayers’ wallets.
CEI thanks Reps. DeFazio and Massie for their bipartisan leadership on this important aviation policy issue.