Airports told to lobby Congress on PFC increase

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WASHINGTON — House Transportation and Infrastructure Committee Chairman Peter DeFazio said Thursday that continued opposition by commercial airlines is hampering the latest effort to increase the Passenger Facility Charge levied by airports.

Many airports are at their maximum bonding ability using the revenue stream from the current PFC levy, according to the Airports Council International-North America.

DeFazio’s comments were made to The Bond Buyer moments after he spoke at an ACI news conference announcing a new report that the nation's airports need $128.1 billion in new infrastructure over the next five years or $25.6 billion on an annualized basis.

ACI officials said the average airport terminal is 40 years old.

"U.S. airports are funded primarily with federal grants through the FAA’s Airport Improvement Program (AIP), a local user-fee called the Passenger Facility Charge (PFC), and airport-generated revenue from tenant rents and fees," the report said. "Airports often turn to capital markets to debt-finance projects, using both PFC-revenue and airport-generated revenue to repay the bonds."

Federal law caps PFCs at $4.50 per flight segment, but airports have been trying unsuccessfully for years to have that cap lifted or outright eliminated.

DeFazio said the problem is that the airlines are “a very powerful lobby” that successfully kept a PFC increase out of last year’s legislation reauthorizing the Federal Aviation Administration.

“The airlines say that if the Passenger Facility Charge goes up people won’t fly anymore,” DeFazio, D-Ore., told The Bond Buyer. “They raised baggage fees. They levy all sorts of ancillary charges and people still fly. I think people would be willing to pay $1 or $2 to have a better airport experience, cheaper tickets, faster security lines, all those things. This money directly benefits the passengers.”

Kevin Burke, president and CEO of ACI, said many airports “can’t borrow anymore because they are what we call tapped out on their PFCs, which means they have to come up with alternatives they are generally far more expensive and take much longer to build.”

DeFazio said it’s incumbent on the airports and ACI to “make a good case of unmet needs, which I need to see.”

“Thus far I’ve only had one airport provide useful information, which was Spokane,” said DeFazio, explaining that particular example showed a savings of over $100 million in interest costs.

“I need more airports to come forward documenting their unmet needs and how they would move forward with (an increase) of the PFC,” he said. “Some airports are still threatened by the airlines and are reluctant to produce the data.”

Rep. Rick Larsen, D-Wash., who chairs the Aviation Subcommittee, said at the same news conference that lawmakers are considering authorization of a $4 per passenger increase in the PFC to $8.50 as part of a larger infrastructure bill.

Larsen said he’s been telling airports to make the case to their local member of Congress why it’s important to raise the PFC. “They have been doing that over the last several years through our encouragement but that needs to continue,” Larsen said.

DeFazio, however, said he’s not yet committed to an exact amount for raising the PFC. “We haven’t decided what form this will take yet,” he told The Bond Buyer.

Airport officials said a $4 per passenger increase would essentially provide an inflation adjustment from the last time the fee was raised 19 years ago. They want Congress to include an automatic inflation adjustment that’s similar to the inflation adjustment DeFazio proposed in the last Congress under his Pennies for Progress bill to hike the federal gasoline tax.

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