Airports and airlines clashed in a Senate hearing on Thursday over the amount of money airline passengers should be charged to help pay for airport improvements.
American Association of Airport Executives President Todd Hauptli told members of the Senate panel that oversees transportation issues that the cap on the amount airports are allowed to charge on every airplane ticket should be increased from $4.50 to $8.50 to help finance facility improvements.
“By any measure, airports around the country need additional resources to upgrade aging facilities, accommodate rising demand, and to keep pace with evolving safety and security standards,” Hauptli told members of Senate Commerce, Science and Transportation Committee’s Aviation Operations, Safety, and Security Subcommittee in testimony submitted for a hearing on Thursday.
“Unfortunately, infrastructure investment in the United States is still behind other countries in the world,” he continued.
Hauptli said lawmakers should increase the airport fee, which is known as the Passenger Facility Charge, in a funding measure for the Federal Aviation Administration (FAA) that is coming due in September.
“At a time when there is enormous pressure to reduce federal spending, modernizing the local Passenger Facility Charge (PFC) is the best way to deliver additional resources to airports and make our infrastructure more competitive,” he said. “Last adjusted in 2000, a modernized PFC would help airports of all sizes. In fact, some of the most compelling calls for self-help come from small airports in communities like Manchester, New Hampshire; Sioux Falls, South Dakota; and Spokane, Washington.”
Airlines offered lawmakers on the panel a starkly different picture, saying passengers are already charged enough by the government when they purchase flight tickets.
“The U.S. aviation industry and its customers already pay $20 billion in 17 unique taxes and fees imposed by the federal government,” Airlines For America senior vice president of legislative and regulatory affairs Sharon Pinkerton told the panel. “Federal taxes and fees account for $63 on a typical domestic round-trip ticket of $300 – approximately 21 percent of the total cost going to taxes and fees – putting air travel in the same tax bracket as ‘so-called’ sin products, which are taxed to discourage use.”
Pinkerton told lawmakers that airlines have worked with airports to pay for facility improvements without a Passenger Facility Charge increase.
“Airlines and airports have a history of partnering on significant improvements,” she said. “Since 2008, over $70 billion of capital projects have been completed, are underway, or have been approved at the nation’s 30 largest airports alone, and development is robust at smaller airports across the country as well. This funding enabled new runways and terminals, better facilities and more amenities for passengers. All of this investment has occurred without any new taxes.”
AAAE’s Hauptli said airports need the additional funding now because the number of airline passengers is expected to increase as the nation’s population grows.
“The FAA’s latest Aerospace Forecast also indicates that enplanements are expected to increase to more than 800 million passengers by 2017,” he said. “The agency anticipates that passenger enplanements will reach the one billion mark by 2029 – just 14 years from now. By 2034, passenger levels are expected to exceed 1.1 billion.
“Another 320 million passengers is the equivalent of adding the entire U.S. population to our already constrained aviation system,” Hauptli continued. “That may seem like a long time into the future, and the FAA’s estimates may change some. But planning, designing, and building runways and other capacity-enhancing projects can take an enormous amount of time. Airports simply don’t have the luxury of being able to flip a switch and instantly complete a new runway or some other large capacity project.”
Pinkerton said airports have more access to funding than Hauptli suggested.
“According to their own financial reports filed with the FAA, U.S. airports have more than $11.4 billion of unrestricted cash and investments on hand, or approximately 357 days of liquidity,” she said. “I am not aware of many businesses, much less families that have the luxury of having a year’s worth of operating expenses saved up. If airports need more money, they can easily utilize the bond market to raise revenue.”
Lawmakers on the Senate panel sought to remain above the fray, saying there is validity to the arguments from both airports and airlines.
“It is easy to see the raise the PFC or keep the PFC the same arguments as merely a dispute between airports and airlines,” the panel’s chairwoman, Sen. Kelly Ayotte (R-N.H.) said. “However, it’s our job on this committee to consider policies that will strengthen our infrastructure, keep our aviation system safe and reduce burdens and costs on the traveling public.
“We owe it to traveling Americans to ensure that we promote efficient financing mechanisms,” Ayotte continued. “As a frequent traveler, I can tell you that I value good facilities that help me get home to my kids safely … and I know that my constituents do as well.”