Airlines, airports battle over passenger fees

An ongoing battle over passenger fees to pay for airport improvements and maintenance landed before the Senate aviation subcommittee as Congress considers a bill that will fund the Federal Aviation Administration (FAA) for the next five years.

The fight is over raising the cap on the Passenger Facility Charge (PFC), a fee of up to $4.50 paid by travelers at U.S. public commercial airports. The funds are used by airports to pay for FAA-approved projects or to boost air carrier competition.

On one side, Airlines for America (A4A), which represents the nation's major carriers, said there's no need to raise the PFC cap to $8.50 because airlines have already invested in facilities, and airports have access to the bond market and the Airport and Airway Trust Fund for projects.

"Airports across our country are in a very strong financial position, already receiving billions of dollars from passengers and the government alike," said Sharon Pinkerton, A4A's senior vice president, legislative and regulatory policy, in her testimony before the committee. "In 2013, U.S. airports collected a record $24.5 billion in revenue – a 52% increase on a per-passenger basis from 2000 – including $10 billion in airline rents and fees, $2.8 billion from existing PFCs, $8.2 billion in non-airline revenues and $3.4 billion from the FAA's Airport Improvement Program. The data clearly shows that projects can easily be done without raising taxes on passengers."

On the other side, the American Association of Airport Executives (AAAE) argued that facilities need the higher PFC cap to finance badly needed facility upgrades. "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," said AAAE president and CEO Todd Hauptli in his statement.

According to Airports Council International-North America's (ACI-NA) 2015 Capital Needs Study, airports will need more than $75.7 billion in the next five years for capital requirements. A March 2015 report by ACI-NA and AAAE said that more than 30 small, medium and large airports have projects pending because of an outdated PFC cap.

But airlines have stepped up to build facility projects, including: a new international terminal being built by Southwest Airlines at Houston Hobby Airport, JFK's Terminal 5 and international extension built by JetBlue, Delta Air Lines' expansion of Terminal 4 at JFK, and Delta's Terminal A at Boston-Logan International Airport.

Pinkerton noted that since 2008, more than $70 billion in capital projects -- including new runways and terminals, better facilities and more amenities for passengers -- have been completed, are underway or have been approved at the top 30 U.S. airports, all without new taxes.

But Hauptli argued that a PFC adjustment is long overdue, saying that the cap hasn't been adjusted since 2000. "Modernizing the cap would allow airports to finance a greater share of critical infrastructure projects with their own local revenues," he said.