DALLAS – Airports would be able to issue more revenue bonds to finance terminal projects and other infrastructure upgrades if Congress eliminates the existing cap on their passenger facility charges, said lawmakers who introduced legislation to remove the cap.
The Rebuilding America's Airport Infrastructure Act (H.R. 1265) filed last week by Reps. Peter DeFazio, D-Ore., and Thomas Massie, R-Ky., would lift the current PFC cap of $4.50 that is added to most airline tickets in exchange for reducing the Federal Aviation Administration's airport improvement grant program.
"If we want to restore our aging airports to their former glory — not to mention help them keep up with increasing demand — we must give them the tools to improve and expand their terminals, runways, and taxiways," said DeFazio, who is the ranking Democrat on the House Transportation and Infrastructure Committee. "By uncapping the PFC, our legislation would do just that."
DeFazio cited a report by the Airports Council International-North America that airports will need $100 billion of new capital investments over the next five years to replace aging infrastructure and meet growing passenger demand.
"Airports are already bonded out, they're tapped out," he said. "They need a way to finance bonds for the improvements they need to make."
Removing the existing PFC cap would help modernize the nation's airports and enhance local control over them, Massie said.
"This legislation reduces airports' dependency on federal funds because some of the major airports will raise their PFC above the current cap of $4.50 and forego federal grants," he said.
Whether to raise the PFC is a decision that should be made by individual airport boards and not by lawmakers, Massie said.
"We are not increasing the PFC," he said. "We are giving [airports] the freedom to do whatever they want."
Revenue from the PFC totaled $3.1 billion in fiscal 2016 and is expected to total $3.2 billion in 2017, according to the FAA.
Most commercial airports levy a PFC, with 29 of 30 large airports and 28 of 29 medium airports charging the maximum of $4.50 per trip segment, according to the FAA. Of the 356 U.S. airports that are allowed to levy a PFC, 341 do so.
Increasing the PFC would be an unnecessary burden on passengers, according to airline groups that oppose the change.
"Saddling passengers with more taxes is not the solution, particularly given the abundance of funding resources already available to airports for capital improvement projects," said Kathy Grannis Allen, director of communications at the Airlines for America trade association.
DeFazio said the airlines fear rivals would challenge their turf if terminals were enlarged.
"The president has said he wants to rebuild airports. What is better than a user fee for the users of the system to pay?" he said. "What they [the airlines] are really worried about is that you might build more gates and expand your terminals and we might have some more competition. It's time to get past this and get real."
The Seattle-Tacoma International Airport is financing $3.2 billion of capital projects over the next eight years with bonds supported by its PFC but that source is drying up, said Sea-Tac managing director Lance Lyttle.
Another $10 billion of needed capital projects could be curtailed if the PFC cap is not raised, he told lawmakers last week at a session of the transportation committee's aviation panel.
"Funding our existing capital plan will use essentially all of Sea-Tac's anticipated PFC collections through 2035 -- and most PFC collections through 2047--to pay revenue bond debt service," he said. "There will be little available PFC capacity to pay for billions in projects identified in our master plan."
