Today, the Senate Appropriations Committee will hold a markup on the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act for 2018. To be considered is a provision that would increase the passenger facility charge (PFC) cap from $4.50 to $8.50. The last increase occurred more than 15 years ago and inflation has eroded that buying power by approximately half.
The PFC is a local airport user fee authorized by Congress and heavily regulated by the Federal Aviation Administration. The airlines hate it because it allows airports to make additional investments without airline financial support. Over the years, cash-strapped commercial airports have been forced to beg for airline support for needed facility enhancements. In exchange for giving their support, airlines often demanded long-term exclusive-use gate leases, which they are then able to use to limit competitor entry into the airports.
It is important to note that the only reason the PFC exists in that the airlines successfully lobbied Congress to outlaw local airport user fees in the 1970s. In an effort to ween airports off of federal grant welfare, the Reagan administration began developing the concept that became the PFC. It was finally implemented in 1991 by the George H.W. Bush administration.
CEI has long advocated uncapping the PFC all together. A small number of conservative organizations, such as Americans for Tax Reform (ATR), have lobbied against increasing or uncapping the PFC cap. But their opposition, while on its face seems understandable, is basically a plea for continued airport reliance on federal grant welfare. This is not a conservative position.
The THUD appropriations act being considered today would also increase federal grant spending by $250 million. Earlier this year, Reps. Peter DeFazio (D-OR) and Thomas Massie (R-KY) introduced legislation that would have uncapped the PFC and reduced airport grant spending by $400 million. This group of conservative opponents was given the opportunity to support a bipartisan proposal to reduce federal spending and control of local airport decision-making. But thanks in part to the efforts of ATR and their small number of allies on the right, the PFC cap and federal airport grant spending may soon be increased.