DALLAS - Airline advocates told Senate Commerce Committee members at a hearing on Thursday that there is no need to almost double the federal passenger facility fee that airport executives contend is necessary to fund terminals and other facilities needed to meet projected growth in air traffic.
The committee is considering a proposal from the Obama administration to increase the PFC to $8 from the current $4.50 per trip segment and in exchange reduce the Federal Aviation Administration's airport improvement grant program to $2.9 billion in fiscal 2016 from $3.35 billion the previous fiscal year.
Airports are asking for the cap to be increased to $8.50. Each eligible airport sets its own PFC, subject to the FAA maximum, which is collected by the airlines as part of the ticket price.
Airports generated a record $24.5 billion in revenue in 2013, including $2.8 billion from the existing PFC and $10 billion in airline rents and fees, said Sharon Pinkerton, vice president for legislative and regulatory affairs at the Airlines for America advocacy group.
"Given the current abundance of resources in the aviation system, it takes a bit of chutzpah for our airport partners to advocate for a historic tax hike on the traveling public through a nearly 90% increase in the PFC airport tax," Pinkerton said. "It simply is not necessary."
Financial reports filed with the FAA indicate that U.S. airports have more than $11.4 billion of cash on hand, or about 357 days of liquidity, she said.
"If airports need more money, they can easily utilize the bond market to raise revenue," Pinkerton said. "With investment-grade credit ratings, airports can obtain inexpensive financing, which is a much better alternative than Congress increasing taxes on passengers."
The objection to a higher PFC is disingenuous from an airline industry that has collected more than $20 billion in baggage and seat fees since 2008, said Todd Hauptli, president of the American Association of Airport Executives.
"Last year, airlines collected more in baggage fees than the FAA provided for airport improvements," Hauptli said. "It's absolutely imperative to modernize the PFC to restore the purchasing power it has lost since the last increase 15 years ago."
Airports had more than $84 billion of debt on the books at the end of 2013 and have limited access to the bond market for future projects, he said.
"Many airports are unable to issue new bonds because they have reached the limits of their debt capacity," Hauptli said.
PFC collections peaked at $2.9 billion in 2006 and totaled $2.78 billion in 2014, said Gerald Dillingham, director of physical infrastructure issues at the Government Accountability Office. Raising the PFC to $8 would bring in an additional $2.36 billion a year, he said.
A recent aviation industry survey said planned airport capital costs will total $72.5 billion through 2019, Dillingham said.
"Many airports' future PFC collections are already committed to pay off debt for past projects, leaving little room for new development," he said. "At least 50 airports have leveraged their PFCs through 2030 or later."
Meanwhile, business and labor representatives urged the Senate Banking Committee during a hearing on reauthorization of surface transportation legislation, to increase federal funding of public transit in the next multiyear bill.
Efficient public transit infrastructure is a priority for the U.S. Chamber of Commerce, Janet Kavinoky, the group's executive director for transportation and infrastructure, told committee members.
"This country is long past the time when highways alone can serve the needs of business," she said at the hearing on Thursday. "A first-rate national transportation system is necessary in order to maintain a first-rate economy."
Kavinoky urged the senators to pass a multiyear transportation bill before the current extension of the Highway Trust Fund expires May 31, and to pay for it with an increase in the federal gasoline tax.
"The alternative is to begin the pattern of extensions and revenue patches once again," she said.
