DALLAS U.S. airports’ $75.7 billion of capital development needs through 2019 are significantly higher than their expected revenues from passenger facility charges, federal grants, and net operational income over the same period of time.
Those figures were recently released as part of a new infrastructure cost estimate made by the Airports Council International-North America.
“The existing federally mandated funding system fails to meet U.S. airport capital needs for modernizing and expanding airport capacity,” the aviation advocacy group said. “Failure to meet the future capital needs of airports will impair the ability of U.S. airports to be globally competitive.”
Projects at large hub airports will account for $40.1 billion of planned investments, with another $16.8 billion at smaller hubs, the survey said. About half of the capital projects at the large hubs are passenger terminal improvements and expansions.
Revenues from the passenger facility charge and bonds supported in part by the passenger charge are used by airports to fund some 60% of facility upgrades, ACI-NA said.
The $15 billion per year of upgrades needed to meet growing passenger and cargo demand, while maintaining existing facilities, underscores the need to increase the federal passenger facility charge from the current $4.50, said Kevin Burke, ACI-NA president.
Additional revenues from a higher PFC and a more robust Federal Aviation Administration grant program would allow airports to adequately fund infrastructure upgrades, Burke said.
The FAA’s proposed fiscal 2016 budget of $15.8 billion includes $2.9 billion in airport grants, down $450 million from fiscal 2015, FAA Administrator Michael Huerta said during a House Appropriation Committee hearing on Tuesday.
The budget would offset the grant cut by increasing the PFC to $8, the first increase in the fee’s cap since 2000, he said.
“The proposal will increase capital investments while decreasing FAA’s overall budget by reshaping the airport financing system,” Huerta said. “This transformation focuses federal grant dollars on airports that need it most, while providing for increased investment in airport infrastructure.”
The General Accounting Office said in January that the $4.50 PFC generated $2.8 billion for airports in fiscal 2013. An increase in the cap to $8 would provide an additional $2.36 billion per year, GAO said.
Each airport sets its own PFC, subject to the current $4.50 limit, which is collected by the airlines.
Airports handled 756 million passengers in fiscal 2014, but the load is expected to top 1.1 billion in 2035, the FAA said in a report issued March 16.
Airports know they need to invest in the facilities needed to handle the additional passengers over the next 20 years, but are constrained by a low PFC cap, said Todd Hauptli, president of the American Association of Airport Executives.
“We need to build and upgrade runways, terminals and other facilities, but the options available to airports for doing so are limited by federal budget constraints and an antiquated federal cap on the local PFC,” he said.
Airlines for America, which represents the major U.S.-based carriers, said airports can fund the necessary upgrades without a higher PFC. It said airlines and airports have together funded more than $70 billion of capital projects since 2008.
“Airports have their hands out and are expecting American air travelers to pay more of their hard-earned money without being able to show why they need it,” the airline group said.
