DALLAS —Airport representatives urged lawmakers on Wednesday to double the federal airline passenger facility charge to fund aviation infrastructure growth, while an airline group contended that airports have the financial resources they need to meet growing demand without adding to air travelers' financial burden.
U.S. carrier growth is expected to average 2.2% a year over the next 20 years, said Rep. Frank LoBiondo, R-N.J., chairman of the aviation subcommittee of the House Transportation and Infrastructure Committee, citing a long-term forecast by the Federal Aviation Administration. This growth "may require the need for increasing system capacity," LoBiondo said.
The total estimated annual cost for airports' planned development projects is about $13.1 billion through 2017, said Gerald Dillingham, director of physical infrastructure issues at the Government Accountability Office. However, he said, only $6 billion a year can be provided through FAA grants and PFC revenues.
"The remaining $7 billion in annual planned development will need to be funded by locally generated revenues or deferred," he told the aviation panel.
President Obama's four-year transportation proposal would allow airports to increase the PFC to $8.00 from the current $4.50. As an offset, the president's plan would reduce funding for the FAA's airport improvement grant program to $2.9 billion in fiscal 2015 from $3.4 billion in 2014.
Collections from the passenger charge totaled $2.8 billion in fiscal 2013,
Almost 400 U.S. airports are allowed to levy the federal PFC, which airports often use to support revenue bonds issued to build or renovate terminals and other facilities. The fee was set at $3.00 when it was authorized in 1996, with the last increase in 2000.
The passenger charge has lost much of its purchasing power to inflation in the last 14 years, said Todd Hauptili, president of American Association of Airport Executives.
"In order to keep up with construction inflation, it is necessary to raise the PFC cap to $8.50 today," he said. "Raising the cap to that level would only allow PFCs to keep up with construction cost inflation that has already occurred."
The airline industry's position is that there is no crisis in funding airport infrastructure, said Sharon Pinkerton, senior vice president for regulatory policy at Airlines for America.
Airports enjoy healthy bond ratings, she said, while airlines are struggling toward profitability after a challenging decade.
Airport revenues are up 59% since 2000, she said, while airline revenues have dropped 12% over the same period.
"U.S. airports enjoy access to a variety of sources of airport project funding and they have consistently been able to tap those sources to pay for improvements," Pinkerton said. "Indications are clear that existing financing capacity for such projects will remain ample."
Many airports have leveraged their revenues from the $4.50 PFC as much as they can, said Mark Reis, chairman of Airport Council International-North America and director of Seattle-Tacoma International Airport.
"In some cases, airports have PFC user fees pledged for 30 or more years to repay money being borrowed today or already borrowed," he said. "By simply raising the PFC user fee cap by $4 and adjusting it to inflation, we can provide the lowest cost solution to keep American's airports modern and competitive."
Bond proceeds currently account for 54% of the funding for U.S. airport capital projects, Reis said.
"U.S. commercial airports' annual debt service expense is $5.6 billion, far exceeding the $2.8 billion of PFC user fees collected in 2012," he said.
