"The Road Looks Rocky For A $7.50 Passenger Facility Charge"

Friday, March 30, 2007

The Road Looks Rocky For A $7.50 Passenger Facility Charge
By Benet Wilson
Aviation Daily on Airports


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, 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, 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 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?

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