May 20, 2019
A coalition letter spearheaded by the Competitive Enterprise Institute (CEI) recently advocated for increasing a tax called the Passenger Facility Charge (PFC), a government fee incorporated into the price of an airline ticket that goes toward airport infrastructure improvements. However, CEI and other supporting groups fail to recognize any increase to the PFC cap will make ticket prices more expensive for American travelers and is not even needed.
Supporters of raising the PFC cap also support nearly doubling the charge—from $4.50 per flight segment to $8.50 per flight segment. The truth of the matter is this steep increase would undoubtedly financially burden American air travelers and their families. Even if the fee were to increase by only $3.50 per segment, a couple with a young child would now need to pay $42 more for their tickets, if they are travelling round-trip with a layover.
This unnecessary added burden on consumers is precisely why a strong coalition of taxpayer-watchdog organizations oppose raising the PFC, including the National Taxpayers Union and Americans for Tax Reform.
We also need to keep in mind the consumers in rural areas. Those who don’t live in areas where airports are within an immediate radius will be disproportionately impacted by any PFC increase. For example, people in the Midwest may live by one regional airport and need to make connections through major cities, so they will automatically be forced to pay more PFCs compared to those living in urban areas—simply because of location.
Undoubtedly, the PFC increase would be another tax on consumers.Airline tickets are already heavily taxed by the federal government.In fact, taxes and fees from the federal government make up approximately 20 percent of the price of an airline ticket. Taxing tickets even further would lead to some unfortunate consequences—including lower airport traffic because of higher prices, in turn forcing airlines to reduce their capacity and level of service. Evidence supports this, too. According to a report from the American Consumer Institute (ACI), it’s estimated that a lift on the current PFC cap would result in 7.5 million fewer airline passengers in 2019 alone.
According to the FAA, American air travelers shelled out more than $3.5 billion in PFC taxes in 2018. This is expected to grow to nearly $3.6 billion in 2019. Among other things, this is an exorbitant amount of money to fund airports that already have the revenue needed to complete improvement projects. Airports are already using funds under the existing PFC cap to complete their infrastructure improvements, suchas major projects at New York LaGuardia, Chicago O’Hare and Los Angeles International.
In fact, any claim that airports do not have enough funding is far from true. Airports have access to multiple streams of revenue. The Airport Airway and Trust Fund (AATF) is projected to have a balance of $9.9 billion by the end of 2020. And in 2019, it’s supposed to have the largest uncommitted balance of any year since the PFC was capped at $4.50. Additionally, it’s estimated revenue generated by the PFC will reach $3.6 billion in 2019 based upon current collection rates. It’s clear that airports have more than enough available resources to complete necessary infrastructure projects.
The bottom line is that keeping airline ticket prices reasonable for the flying public should remain our top priority. With all of the facts considered, it’s clear raising the cap on the PFC would be a mistake. We oppose any increase to the PFC cap, and we must preserve consumers’ ability to travel at an affordable cost.
