U.S. Budget Would Nearly Double Airport PFC Cap

 - March 6, 2014, 12:52 PM
The President's FY2015 budget would raise the cap on the passenger facility charge airports collect for every boarded passenger from $4.50 to $8.

U.S. airlines and airports fell into opposing camps over the Obama administration’s Fiscal Year 2015 budget request for the Federal Aviation Administration, which would raise the cap on the passenger facility charge (PFC) airports are entitled to collect for every boarded passenger from $4.50 to $8. The FAA’s budget is contained in the $3.9 trillion overall federal budget the administration presented to Congress on March 4.

The administration seeks a total of $15.4 billion to fund the FAA in the fiscal year that begins on October 1, a decrease of $350 million compared with the $15.7 billion the Congress enacted for FY2014. Sixty-three percent, or $9.75 billion of the request, is for the operation and maintenance of the nation’s ATC and air navigation systems, a 1 percent increase. The budget reduces spending on the NextGen ATC modernization effort by 7 percent to $836 million compared with funding the Congress enacted for the current fiscal year.

In a budget summary, the Department of Transportation, the FAA’s parent department, attributed the overall budget decrease to a proposal that would lower the overall level of federal grants to airports through the Airport Improvement Program (AIP) by $450 million to $2.9 billion. As it has before, the administration proposes to focus federal grants on smaller commercial and general aviation airports, while giving larger airports more flexibility to raise money for capital projects using the PFC.

While applauding the proposed PFC increase, airport groups want Congress to increase the cap to $8.50 per passenger to make up for a deficit in airport spending power since it last adjusted the charge in 2000, according to the  American Association of Airport Executives (AAAE). “With federal investment in our nation’s airport system declining and facing further constraints, airports desperately need additional tools locally to meet current requirements and to prepare for future demand,” said AAAE president and CEO Todd Hauptli. “Unfortunately, local airport authorities remain hamstrung by a federal cap on local airport user fees that was last adjusted more than 14 years ago and that remains woefully inadequate to meet the very real and growing needs that exist at airports across the country.”

Not so fast, said Airlines for America (A4A), the trade organization representing major U.S. airlines. A4A complained that the proposed budget would add $4.2 billion in new and higher taxes airlines and their passengers pay. In addition to raising the cap on the PFC, the budget would increase the Transportation Security Administration (TSA) tax from $5.60 per one-way trip to $6; increase the Department of Homeland Security customs fee from $5.50 to $7.50; impose a new mandatory $100 per flight departure tax; and reinstate the Aviation Security Infrastructure Fee the TSA charges airlines for screening passenger baggage, which the Congress repealed last year.

A4A president and CEO Nicholas Calio said the PFC cap increase is “unwarranted” because airports generated near-record revenue of $23.9 billion last year, including $2.8 billion from PFCs. “Raising the PFC will drive up the cost of flying for millions of Americans who rely on air travel, cost jobs, limit service options to small and medium communities and ultimately harm the U.S economy,” Calio said. “Passengers, airlines and the U.S. economy simply cannot afford higher taxes on air travel and we urge Congress to hold the line by rejecting the unnecessary PFC hike and other tax increases.”