Matthew Kandrach – President, CASE
July 26, 2019
I don’t think I’m going out on a limb in saying that every American would oppose the idea of paying higher taxes for no purpose. It comes as disappointing news then that U.S. airports are now attempting a wholly unnecessary fee increase on the Passenger Facility Charge (PFC), a government-issued surcharge on airline tickets that funds airport infrastructure.
Despite that there is no demonstrated justification for additional airport funding, Congress is now moving forward with legislation to hike the PFC. A fee hike was introduced last week by Reps. Thomas Massie (R-KY) and Earl Blumenauer (D-OR) that does little more than give U.S. airports an unnecessary facelift at taxpayer expense.
Airports already have access to multiple streams of revenue, and it’s not unimpressive funding, either. The funding airports receive stems from both the PFC at its current cap of $4.50 per flight segment, the Airport Improvement Fund (AIP) as well as other one-off sources.
The Federal Aviation Administration (FAA) announced this June the addition of $840 million to the AIP. According to the FAA, these grants are set to go to projects at both small and large airports at more than 380 airports across 47 states. Plus, The House Appropriations Committee approved an additional $3.3 billion in AIP funding by 2020. It doesn’t even stop there; the appropriations committee also authorized another $500 million in discretionary funding to go toward airport infrastructure specifically.
But even with such flowing funds, some in Congress are still pushing for a lift on the PFC cap, claiming it’s a necessary hike. The available evidence depicts a different circumstance.
Instead of pushing for tax increases, airports and airlines should be working together to make voluntary investments. For example, Delta has a $1.8 billion project underway at Los Angeles International Airport (LAX) to modernize its terminal. American Airlines has a similar project happening at LAX, after kicking off a major overhaul of its terminal in 2018.
If higher costs for air travelers can be avoided, I believe they should be. Increasing the PFC from $4.50 to $8.50 per flight segment, which is what some members of Congress are proposing, is simply unnecessary. Barring any compelling evidence to support it, some of these same advocates would even like to claim that raising the PFC would lead to shorter security lines and less airport congestion.
The phrase “correlation does not imply causation” fits here. In other words, someone cannot will causation into existence simply based upon a hypothetical correlation. Not only does a lift on the PFC cap have no relation to lessening airport traffic, but anyone who alleges a causal effect between the two is basing such a claim on conjecture.
To top it all off, there isn’t even any significant proof indicating travelers are willing to pay more for an airline ticket in order to utilize a nicer facility. Airports already have the means to pay for improvements. The FAA’s recent announcement on 2019 AIP allocations is enough for anyoneto realize that, even in the absence of other contributing factors.
The inescapable conclusion is that raising the PFC is a money grab that will be paid for by consumers.
