GRI Current Events Blog

Lawmakers and Airports Look to Remove Passenger Facility Charge Cap

GRI Research Assistant

Mar. 2, 2017

Earlier this week Representatives Peter DeFazio (D-Ore­.), ranking member on the House Transportation and Infrastructure Committee, and Thomas Massie (R-Ky.) introduced a bipartisan bill that would remove the $4.50 cap on the Passenger Facility Charge (PFC). The PFC is a fee added to every plane ticket, intended to raise revenue for airport security measures, noise reduction, and airline competition. The proposed bill would also trim $400 million from the federally funded Airport Improvement Program (AIP) budget of $3.35 billion and make airports that choose to charge more than $4.50 ineligible for AIP funds. Lawmakers in favor of the bill say that lifting the cap will allow airports to improve their capacity, modernize facilities, and fund other infrastructure projects.

Aerial View of Sea-Tac Airport (wkimedia commons)

Airport and travel industry groups have long called for an increase on the cap which has not been adjusted since 2000. Last year, industry groups backed an unsuccessful proposal that aimed to increase the cap to $8.50. Managing Director of Sea-Tac International Airport, Lance Lyttle, supported the bill saying that “Without higher PFC authority, our debt service on the bonds to fund master plan projects will flow directly into the airline rate base and likely driving the cost to airlines at Sea-Tac to the highest in the nation.” Eliminating the PFC cap may be especially beneficial for medium-sized airports which have trouble receiving federal funds since they cannot consistently meet capacity requirements.

Airlines have voiced opposition to any PFC hikes, however, describing them as an unnecessary tax increase that would reduce consumer demand for flight tickets. President Trump who hosted a listening session airline industry representatives dismissed the idea of a higher PFC, saying that “the problem is I don’t like raising fees or taxes.”

Update (3/7/17): On March 7, POLITICO reported that the budget proposed by the Trump administration includes deeper cuts into agencies responsible for defending US ports and airways. In addition to reductions to the Coast Guard and FEMA, the budget (which has not yet been publicly released) calls for an 11%, or $500 million, cut from the TSA. The budget suggests offsetting some of the cuts to TSA by increasing the passenger security fee by $1. However, even if the fee recaptures the entire $470 million projected by the Administration, TSA would experience a $30 million funding reduction. During his acceptance speech at the Republican National Convention, President Trump pledged that “we will fix the TSA at airports.”

Sources and Further Reading:

  1. Lawmakers Push to Lift Cap on Passenger Fees for Airport Upgrades – The Hill
  2. ‘Stretched’ to Finance Projects, US Airports Call for Federal Reforms – Air Transit World
  3. Airlines Launch Petition Against Airport ‘Tax’ – The Hill
  4. Proposed Bill Would Lift Cap on Passenger Facility Charge – Travel Weekly
  5. Sea-Tac Airport Pushes to Remove ‘Passenger Facility Charge’ – King 5
  6. Pittsburgh International Exec Endorses Higher Ticket Fees for Facility Upgrades – Trib Live
  7. White House Listening Session on the Airline Industry – C-Span
  8. DFW Airport Chief Joins Political Push to Raise Passenger Fees that Fund Infrastructure – Dallas News
  9. Should Airline Passengers Pay More to Improve Airports – McClatchy DC Bureau
  10. Trump plan pays for immigration crackdown with cuts to coastal, air security – POLITICO

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