DALLAS -- A provision of President Obama's proposed four-year, $302 billion surface transportation program to fund airport infrastructure projects with higher passenger facility charges is either a step forward for U.S. airports or an unnecessary revenue grab, according to rival aviation associations.
The president wants to reduce federal airport infrastructure grants to $2.9 billion in fiscal 2015 from $3.5 billion this fiscal year, while allowing larger hub airports to raise the PFC to $8 from the current $4.50. He is expected to submit draft transportation legislation with Congress next month.
The American Association of Airport Executives recommended an even steeper increase in the "woefully inadequate" $4.50 charge to support additional revenue bonds to fund airport infrastructure that can handle expected increases in passengers.
Airlines for America, a trade group representing a number of airlines, contends that airports have ample revenues to fund terminal expansions and other projects without putting the financial burden on airline passengers.
A January 2013 report from Airports Council International-North America found 60% of U.S. airport capital projects are funded with stand-alone PFC revenue bonds or airport bonds supported with PFCs and other revenue.
The report said airports will need $71.3 billion of new and upgraded infrastructure through 2017 to meet passenger growth.
A new forecast from the Federal Aviation Administration that domestic air travel will increase almost 2%per year through 2034 shows the need for new and expanded airport infrastructure, said Todd Hauptli, CEO of American Association of Airport Executives.
"The forecast makes abundantly clear that domestic and international aviation traffic growth is a reality that will soon add hundreds of millions of people to already crowded airports," Hauptli said.
The passenger facility charge, which was set by Congress at $4.50 in 2000, should be raised to $8.50 rather than the recommended $8 and indexed to inflation, Hauptil said.
"Airports can't meet the needs of tomorrow with a financing system that was last adjusted nearly 15 years ago," he said.
"Airports need to plan and build now to meet that future demand but lack the tools necessary to do so with downward pressure on federal spending and with the purchasing power of the federally capped PFC falling further and further behind the very real needs that exist at airports across the country," Hauptli said.
But airlines oppose the PFC increase because airports are flush with cash, said Sharon Pinkerton, vice president for legislative and regulatory policy at Airlines for America.
Unlike the struggling airlines, Pinkerton said, airports enjoy investment-grade credit, remain financially sound, and have ample access to the bond market to fund capital project needs.
Airports reported revenues of nearly $24 billion in 2012, she said, and have $10.6 billion in unrestricted cash and investments in hand.
"This is not a revenue issue," she said. "This is a revenue grab, for which airline passengers should not be liable."
Pinkerton put little stock in the predicted growth rates in FAA's 20-year outlook.
"If we had taken the FAA forecast at face value in 1995, for example, we would have seen a billion passengers in 2008," she said. "Instead, FAA says U.S. carrier enplanements were 739 million in fiscal year 2013."
The FAA now expects the 1-billion passenger mark to be reached in 2027.
An increase in the PFC is long overdue, said Kevin M. Burke, CEO of ACI-NA.
"Allowing airports the flexibility to implement a modest increase in the maximum PFCs they would be able to charge is an important first step in getting investment in our nation's airport infrastructure back on track with the rest of the world," Burke said.
