The holiday season is in full swing, and tens of millions of Americans will be heading to airports to travel to spend time with friends and family. The 18-day stretch beginning on roughly Dec. 20, represents the busiest 18 days of the air travel year. Last year, an estimated 45.7 million Americans took to the skies over that period.
Unfortunately, for the tens of millions of Americans who will rely on air travel this holiday season, legacy airline carriers are playing the part of Ebenezer Scrooge this year: using the power of the federal government to pad their bottom line and keep the cost of flying artificially high.
Bah humbug, indeed.
Big airlines and their lobbyists have spent millions of dollars trying to prevent Congress from lifting or modernizing the federally imposed cap on the Passenger Facility Charge. The PFC is one of the primary ways that American airports finance their infrastructure needs, particularly when it comes to financing terminal expansion.
The PFC is a user fee, paid for by people who use airports. The PFC is currently capped at $4.50 by the federal government, and that cap hasn’t been modernized since 2000. Since the PFC is not indexed for inflation, the purchasing power of the PFC has dwindled over the last 20 years. While the purchasing power of the PFC has dwindled, infrastructure needs at airports have grown dramatically. Indeed, a recent study estimated that airports face more than $128 billion in unmet infrastructure needs.
According to that most recent study, by far the largest airport infrastructure need surrounds terminal construction.
The reason that terminal needs have grown so dramatically is because of one of the other ways — besides the PFC — that airports finance their infrastructure needs.
When airports are unable to access PFC dollars, they must often turn to the airlines to finance needed airport facility enhancements. Airlines routinely refuse to approve projects that would lead to more competition through the introduction of new carriers. When they do approve projects, in exchange, airlines often demand long-term, exclusive-use gate leases, which are then used to deny access to competing, lower-cost carriers.
The story Joseph Lopano, the CEO of Tampa International Airport, told Congress this year about his airport’s efforts to build a new terminal to attract additional air carriers is incredibly instructive:
The results of the Tampa terminal expansion were a boon for consumers:
…
Many of these flights are on ultra-low-cost carriers, such as Spirit Airlines, which is one of the fastest growing airlines in Tampa. Our airport is attractive to Spirit and other low cost carriers because our cost per enplanement is low, thanks to our responsible financial management and, again, the PFC. Even while completing a recent $1 billion expansion, we were able to use PFCs to lower our overall debt by $76.4 million including $5.2 million in PFC backed bonds.
The current federally-imposed cap on the PFC works for airlines because it protects their bottom lines by limiting competition and keeping airfares artificially high. This system may work for airlines, but it’s a disaster for airports and consumers who are forced to bear the burden of the big airlines’ greed.
There is a fix, and — amazingly enough considering the toxic partisanship in Washington, D.C. — it’s a bipartisan effort. Reps. Thomas Massie, a Kentucky Republican, and Earl Blumenauer, an Oregon Democrat, may not agree on much, but they agree that the best way forward is to remove the federally-imposed cap on the PFC and allow airports to raise the money necessary to make needed infrastructure improvements.
In July, Massie and Blumenauer introduced H.R. 3791, which would remove the cap from the PFC and require that airports who chose to go above their $4.50 PFC forgo federal taxpayer dollars from the Airport Improvement Program.
The fix doesn’t raise taxes, doesn’t require an additional dollar of federal spending, and actually saves the federal government money. Given this, it’s not surprising that it is supported by free-market groups like FreedomWorks, CEI, and Citizens Against Government Waste, among others.
If Congress wants to cut through the toxic partisanship in D.C. and give consumers a Christmas gift, they should pass H.R. 3791.
Christopher Barron is president of Right Turn Strategies.
