Congressional lawmakers are considering increasing a cap on user fees added to air travelers’ ticket prices to help fund airport maintenance and improvement projects.
The passenger facility charge (PFC), a fee authorized by Congress in 1990 and included in President Barack Obama’s fiscal year 2016 budget proposal, allows airports to collect per-passenger fees to offset airport facilities and infrastructure costs. PFCs are collected and used locally, with no federal involvement.
Users Pay for Infrastructure
The current charge is limited to $4.50 per passenger, a cap instituted in 2000. PFC revenues can be used only for specific kinds of airport improvements and are charged only to passengers using the airport’s facilities and services to travel.
Stephen Van Beek, a former member of the Federal Aviation Administration’s (FAA) Management Advisory Council and president of ICF International, says PFCs help enable airports’ self-sufficiency.
“In the long run, new capacity-enhancing projects would allow for new terminals, gates, and airside infrastructure,” Van Beek said. “In congested markets, this enables the entry of competitors and will reduce airfares. This occurred at airports such as Minneapolis-St. Paul Airport and San Francisco International Airport, where low-cost carriers entered the market after facilities were built using PFCs.”
Not every airport would be allowed to increase these user fees, Van Beek says.
“[It is] important to recognize that not every airport would raise the fee,” Van Beek said. “It would only be for federally authorized capacity, safety, and noise-mitigation projects. FAA reviews any application to ensure conformity with eligibility.
“The effect on travel costs is in dispute,” Van Beek said. “Airlines say it would raise the cost of travel, but in the same breath, they say it hurts profitability because they cannot pass on costs to flyers.”
Locally Sourced, Locally Used
Brian Garst, director of policy for the Center for Freedom and Prosperity, says the use of PFCs is entirely local.
“PFCs are entirely for local improvement projects,” Garst said. “And unlike taxes, they aren’t first laundered through Washington, DC before a fraction of it gets back somewhere useful. They stay at the airport where they are collected.”
“User fees are [fairer than other kinds of taxes], because they place the costs on those who benefit from the service, and [are] more visible and responsive to market conditions [compared to] political conditions,” Garst said.
Mark Ramsey ([email protected]) writes from Houston, Texas.
Alan Cole, Tax Foundation, “Improving Airport Funding to Meet the Needs of Passengers”: https://www.heartland.org/policy-documents/improving-airport-funding-meet-needs-passengers/