Organizations representing airlines and the travel industry are at odds over legislation that could increase the cap on a fee automatically included in every airline ticket.
The fee, known as the passenger facility charge, has had a cap of $4.50 for 15 years. But a provision in a Senate appropriations bill would nearly double the cap to $8.50.
While opponents of the cap adjustment argue passengers are already saddled with plenty of fees and want funding already raised to be used first, some travel groups have been lobbying for the cap to be raised to accelerate investments in airport infrastructure and provide better experiences for passengers while traveling.
“[Passenger facility charges] can only be used to fund projects that enhance safety and security, improve efficiency, increase airline competition, or reduce our port noise,” said Erik Hansen, vice president of government relations for the U.S. Travel Association. “These are all things that benefit the passenger. For less than a cup of coffee, you can fund a better passenger experience, you can reduce delays at your airport, you can have more flight options. I think that’s a great value for travelers compared to other fees they might have to pay along the way.”
Sharon Pinkerton, senior vice president of legislative and regulatory policy at Airlines for America, said that although airlines back airport infrastructure, they believe raising the passenger facility charge is unnecessary.
“Airlines do support airport infrastructure. We do think that’s important for our passengers,” Pinkerton said. “We just don’t believe, and the proof is in the pudding, that you need to raise taxes in order to continue the level of spending that is going on right now.”
Airlines for America cites that the cap increase would cost travelers another $2.6 billion per year, which they say is not needed by airports, especially when the Airport and Airway Trust Fund has a balance of nearly $6 billion. They argue this should be spent first before raising the cap on the passenger facility charge.
“What adds insult to injury is the fact that there’s so much money in the system already that remains unspent,” Pinkerton said. “One of the things that we are telling members of Congress is that before you raise taxes on the traveling public, let’s spend the money that’s already available for airports, sitting unobligated and unused in the Trust Fund.”
The Senate Appropriations Committee has included language raising the cap to $8.50 in the Senate 2018 Transportation, Housing and Urban Development and Related Agencies Appropriations Act, which Congress must approve by Dec. 8 to fund the government.
As a result, groups representing airlines and travel organizations are lobbying for their positions on the measure.
More than 140 organizations, spearheaded by U.S. Travel, submitted a letter to lawmakers last month requesting that the provision be kept in the Senate’s version of the appropriations bill, and advocating for it to be included in the House’s corresponding legislation.
The letter notes that air traveler spending contributes to economic activity and supports American jobs. They say that over the next 10 years, air travel is projected to grow from 776 million to 926 aircraft boardings per year. This would contribute to annual travel spending and would support 750,000 new U.S. jobs, they argue.
“Unfortunately, this growth can only be realized if our airports have the financial resources to modernize and promote competition,” they wrote.
The groups cited a study conducted by Cambridge Systematics on behalf of U.S. Travel that shows over the next four years, the top 30 U.S. airports will encounter traffic levels and delays comparable to the day before Thanksgiving at least once per week.
“Too many of our nation’s airports are outdated, congested and unable to handle passenger demand,” the groups wrote. “These problems are forecasted to grow and will soon be unsustainable.”
Likewise, airlines have been vocal about their position. Airlines for America, which represents most of the largest carriers, submitted their own letter to lawmakers this month. Nicholas Calio, president and CEO of Airlines for America, cited that airport revenues have reached an all-time high. In fiscal 2017, the Federal Aviation Administration hit a record high in revenues collected from passengers that exceeded $14 billion.
He said the “overabundance” of tax revenue is why the Airport and Airway Trust Fund has a balance of nearly $6 billion.
“Passengers have already paid that money into the Trust Fund,” he wrote. “The balance is roughly equivalent to more than two years of the increase that you supported.”
Robert Poole, director of transportation policy at the Reason Foundation, explained why those funds have not been used.
“It is true that there is a fairly large balance in the Aviation Trust Fund, but the odds of that being added to airport spending are very close to zero,” Poole said. “The reason FAA does not request such spending is that, like all federal agencies, it can only ask for what [the Office of Management and Budget] will allow. And with trust funds like this, OMB regularly holds down spending, compared with the revenues generated by the taxes that feed the fund, in order to make the reported federal budget deficit look smaller.”
As a result, Airlines for America requested Congress authorize using the funds.
“Congress should immediately pass legislation directing the FAA to spend down the excessive unobligated trust fund balance rather than further taxing passengers,” they wrote.
Charles Leocha, president and co-founder of Travelers United, a membership organization that represents travelers, said if airports want to fund projects, there are other means of collecting revenue.
“The localities, the municipalities, the surrounding businesses, those who benefit from this giant economic engine should pay some of the operation costs instead of hoisting all of those costs onto the consumers,” Leocha said.
Additionally, Leocha said the revenue could be collected at a local level, rather than using federal funding.
“The airports, if they need to have more money, can go to their constituents and raise the money locally,” he added. “That’s the way it should be done.”
Critics of raising the cap argue passenger demand would be hit hard. For example, Delta Airlines cited a Government Accountability Office estimate that for every $1 increase in the passenger facility charge, passenger demand declines by more than 1 percent.
But Hansen said demand wouldn't decrease and said outdated systems are already hurting travel for passengers.
“Because our system is outdated and inefficient, it’s already having a drag on travel,” Hansen said. “The increase, or the opportunity to invest in projects that improve the travel experience, is only going to facilitate growth. We don’t think it will dampen it at all.”
Additionally, Hansen said the majority of the travel industry agreed the cap adjustment would benefit passengers.
“What unites our membership is our policies, growth, and the best travel experience and that’s why we’re united behind this policy,” Hansen said, referring to the groups that came together to back the cap adjustment. “As the letter shows, almost every sector of the travel industry except for just a handful of airlines are supportive of this provision. I think that it speaks to the fact that travel is about hospitality, it’s about having an efficient experience, being able to get from point A to point B, in an easy way and this is a policy that’s going to support that.”