A tax bill amendment that was introduced last week by Sens. Jay Rockefeller, D-W.Va., and Byron L. Dorgan, D-N.D., would establish a pilot program for six airports to collect potentially unlimited passenger facilities charges.
The PFCs are local taxes on air travel tickets and currently are capped at $4.50 under federal law. Airports often use PFCs to back bonds, and airport groups have been fighting for the cap on PFCs to be increased to $7.00. The Federal Aviation Administration has estimated that such an increase would boost airport revenues by as much as $1.3 billion per year.
However, the amendment stipulates that airports participating in the pilot program would have to collect the PFCs from passengers, instead of relying on airlines to do so. They would be allowed to collect the PFCs via the Internet or “any other reasonable manner.”
The amendment also would direct the comptroller general to conduct a study of “alternative means of collection” that would keep the PFCs from being included in air ticket prices. The comptroller general would have to deliver a report with its findings to the Senate Commerce, Science, and Transportation Committee within a year.
Rockefeller, chairman of the committee, introduced the amendment last week to HR 1586, which would impose an additional tax on bonuses received from certain Troubled Asset Relief Program recipients.
He had introduced the pilot program last July in legislation that was cosponsored by Sens. Kay Bailey Hutchison, R-Tex., and Jim DeMint, R-S.C., who also cosponsored the amendment. The previous bill was approved by Rockefeller’s committee but never voted on by the full Senate.
The collection of the charges may be a sticking point in the success of the program, if it is approved by the Senate, some airport sources said.
“Airport folks I talk to say there’s just no way we could do it,” one airport industry source said Friday. “Airports just haven’t found a creative way to make that happen.”
Instead, they say, Congress should move forward with a provision that was included in a previous House bill that would simply allow airports to charge PFCs up to $7.00 as part of the ticket price.
The PFC cap was last increased in 2000, and airport sources argue that construction cost inflation has greatly eclipsed the increase, eroding its value.
The pilot program would allow airports to increase PFCs, but “the trick will be, if [the provision] ends up in the final version of the bill, if people come up with ways to collect” them, said Jane Calderwood, vice president of government and political affairs for Airports Council International-North America.
“We essentially support the pilot projects because you always learn things” from them, she said.
Additionally, the amendment introduced by Rockefeller would reauthorize FAA programs, including the airport improvement program.
The last FAA reauthorization bill expired in 2007 and has been extended by 11 stopgap measures since then. Airports use AIP funding to make facility improvements, but not to back bonds.