The Road Looks Rocky For A $7.50 Passenger Facility Charge

The March 28 issue of Aviation Daily includes two of my stories about the status of plans to raise the cap on Passenger Facility Charges (PFCs) under the FAA reauthorization bill.  I had the chance to attend the spring legislative conference held by the American Association of Airport Executives (AAAE) and Airports Council International-North America (ACI-NA), and the PFC cap was a topic of discussion during a panel with House and Senate staffers talking about the bill.

Back in January, I spoke to executives from AAAE and ACI-NA on what they would like to see in a final reauthorization bill ( you can see their remarks here and here), but both clearly state that the PFC cap needs to be lifted from its current $4.50.  FAA's proposal calls for moving the cap up to $6.00.

But the staffers speaking at the panel on Monday were not optimistic about both organizations' call for to move the cap further up, to $7.50.  In my story (subscribers only), House aviation subcommittee staffer Giles Giovinazzi said that it's hard to rationalize the $7.50 PFC when a $6.00 increase is on the table. "You can rationalize it as half a loaf is better than nothing at all, since we're now at $4.50," he said.

Rep John Mica (R-Fla.) has been a strong supporter of lifting the cap completely, said House Aviation subcommittee staffer Holly Lyons. "He feels that airports best know what their local needs are and encourages them to talk with members and tell them what the PFC increase will mean for the local area," she said.

Sen. Trent Lott (R-Miss.) is concerned about the tax implications of raising the PFC cap, said Chris Bertram, a senior staffer on the Senate aviation subcommittee. "Some see PFCs as a tax increase, so it may be harder to see members voting on what is seen as an increase."

Sen. Jay Rockefeller (D-W.Va.) knows that airports in West Virginia and smaller communities depend on Airport Improvement Program funds, so he is more focused on finding more money for that, said Senate aviation subcommittee staffer James Reid. "We have a very tight timetable for passing an FAA reauthorization bill. We're concerned that a two-day food fight over PFCs could hurt the bill," he said.

And in remarks at the same conference a day later, my story (subscribers only) quotes FAA Administrator Marion Blakey saying that her agency responded to airports' request for more flexibility in spending PFCs to handle future capacity in its reauthorization proposal.

"We predict that every month that goes by without raising the PFC costs airports $100 million," said Blakey. "Perhaps worst of all, foot-dragging on our bill will rob you of your ability to plan ahead. I know how important that is to airports, big and small alike."

The FAA proposal addresses concerns raised by smaller airports, said Blakey. "As many of you know, they're under a lot of pressure to keep landing fees and terminal rents low to keep businesses and attract new ones. They say that additional PFC flexibility could help them do just that," she said.

"Their argument is if PFCs were available to pay for things like garages, more revenue would flow to the bottom line to help offset their operating costs."

Panelists at the conference said on the one hand, that it's critical that a reauthorization bill is passed by the Sept. 30 deadline.  But on the other, they admit that debate on the Iraqi War is sucking the air out of talks on other issues, including FAA reauthorization.  A clear warning was made that if Congress was unable to complete a bill by the end of FY2007, the effort could be pushed back to as far as 2010.  Why?  2008 will be dominated by the presidential election and 2009 will see the installation of a new administration that may not make FAA and aviation a top issue.

So should airports take the $6.00 PFC that's on the table or push for the $7.50 and possibly risk having the bill held up?  Tell us what you think!

Comments

[Anonymous]

All I see here is a discussion of airports trying to grab more money from passengers. Where is the discussion of what passengers get from the extra money we will be asked to spend on each ticket? At least there is a cap. I can't begin to imagine what the PFC charges per segment would be if the cap were removed. Don't make this a money grab like the outrageous convention center and stadium taxes I've encountered.

[Benet Wilson]

Dear Anon: while I understand your point, where else are airports going to get the money? Airports were hit with federal mandates by Congress after 9/11 that weren't funded. Seen those big ugly baggage screening systems in the lobby of your local airport? They're there because airports were told to comply the best way they could and except for 9, told to find the money to pay for it. And the airlines are all financially struggling, so they aren't going to give airports any more money than is possibly necessary. People spend more and more time in airports and they want nice facilities, shopping, eating, wifi, etc. The money has to come from somewhere. Do you have any suggestions where?

[Chris T]

Most large airports are operated, controlled and funded by the cities they serve, such as LAX. Too often these cities see the airports as a source of income only and will spend the absolute minimum necessary on structural upkeep and improvements. LAX is a grand example of this. If airports want revenue it seems they would be eagerly adding new concessions and retail that the passengers have come to expect and WILL use (if you build it they will come). We pay a TSA charge for each flight as well as up to 4 hits for PFCs on multi-leg flights so everybody is getting a piece of the pie. Each individual charge is a small amount but as fares go up it becomes a big impact on shorter flights. As a passenger I am already paying (via airfare) for landing fees, terminal rents, etc. through the airline so this just becomes a legitimized end run like cities in Florida who override the property tax cap by now charging separate "fees" for items previously included in the property taxes. Finally, PFCs should never be used to build garages, garages should pay for themselves at the high rates they charge at most airports. They should let concessionaires pay to build the garages and charge accordingly to fund and maintain them. The problem is that airports depend on the inflated parking rates to fund other airport or city revenue shortages. Its all a big shell game with our money.

[wine packaging]

You might be wondering why there's any need for further "greening.