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Airlines vs. Airports: Who Will Fund Infrastructure Projects?

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Airlines vs. Airports: Who Will Fund Infrastructure Projects?

Airlines vs. Airports: Who Will Fund Infrastructure Projects?
April 29
07:36 2015

MIAMI — With the FAA’s funding authority running out on September 30, 2015, airports are among those looking to get their piece of the pie from a final spending bill that includes a hike, from up to $4.50 to a cap of $8.50 for every boarding passenger. But Airlines for America (A4A), the industry’s trade organization has banded together with the Association of Corporate Travel Executives (ACTE) and Global Business Travel Association (GBTA), the Travelers United coalition and others to oppose the PFC hike.

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In a recent letter to the top leaders of the House Transportation Committee and Aviation Subcommittee, representatives from 125 airports under the Airports United coalition — an alliance between ACI-NA and the American Association of Airport Executives (AAAE) — urged them to modernize the PFC to help fund infrastructure projects. Airports Council International-North America’s (ACI-NA) new 2015 Capital Needs Survey found that commercial and general aviation facilities across the country have $75.7 billion in total projects that are considered essential by the airport and its users.

PFC funds can be used to fund FAA-approved projects that enhance safety, security, or capacity; reduce noise; or increase air carrier competition, covering things like new runways and expanded terminals.

“In this current budget climate, modernizing the PFC cap to $8.50 and periodically adjusting it for inflation is the most fiscally responsible way to ensure that airports have the local self-help they need to increase capacity, promote competition, and enhance safety – all of which accrue to the benefit of communities and the travelling public,” the letter said. “Congress last adjusted the federal cap on local PFCs in 2000 – 15 years ago. Since then, rising construction costs have severely eroded the purchasing power of the locally controlled fee.

“Modernizing the PFC cap to $8.50 would restore the PFC’s lost purchasing power and allow airports to adjust their own PFC user-fee level based on locally determined needs to ensure the continued safety, security, and modernization of their facilities,” said the letter. The outdated federal cap on the local PFC – last adjusted in 2000 – hampers airports’ ability to plan for future growth and artificially limits airline competition, according to Airports United.

“Since 2008, more than $70 billion of airport capital projects have been completed, are underway or are approved by U.S. airlines and their airport partners at the nation’s largest 30 airports alone, and development is also robust at smaller airports, including Dayton, Sioux Falls and Greenville-Spartanburg,” said A4A SVP, Legislative and Regulatory Policy Sharon Pinkerton. “Airports have plenty of resources and passengers are already taxed enough.”

The proposed hike comes at a time when airline customers are benefitting from affordable airfares having not kept pace with inflation. U.S. airlines continue to be very competitive at numerous key cities across the United States and every U.S. airline is increasing capacity with year-over-year growth in available seat miles that average 5.6 percent from second quarter 2014, compared to the same period in 2015. This improving financial strength has enabled airlines to reinvest in our product, people and airports at a rate of $1 billion monthly, the highest capital investment in 14 years.

“Some groups want to increase the PFC to $8 per boarding. That, along with other taxes and fees, means that a business traveler could see an increase of $58.20 for a round-trip ticket,” said GBTA Executive Director and COO Michael W. McCormick. “Travelers don’t need to be the piggy bank. Beyond the investments made by airlines, airports have more than $11 billion in unrestricted cash and investments while bringing in more revenue every year – a record-high $24.5 billion in 2013.”

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About Author

Benét J. Wilson

Benét J. Wilson

Mother, Aviation Queen, Veteran Aviation Journalist, AVgeek since age six, number one fan of the Boeing 747 and Student pilot (can't stick my landings). I would actually pay rent to live in an airport. bwilson@airwaysmag.com @AVQueenBenet

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