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"U.S. airports say they have only half of the $100 billion they needfor major fixes"


 
Wednesday, March 8, 2017

U.S. airports say they have only half of the $100 billion they need for major 
fixes 
By Mark Niquette and Alan Levin
Bloomberg News


U.S. airports estimate they need almost $100 billion for capital projects 
during the next five years and can only fund about half of that on their own, 
according to a study by a group representing commercial airport owners.

Airports are coping with a number of changes that have stretched existing 
facilities, including higher passenger and cargo activity, aging 
infrastructure, and consolidation in the airline industry that has increased 
the demand for hubs, the Airports Council International-North America said in a 
bi-annual study released Tuesday. The cost projections for 2017 through 2021 
are 32 percent higher than the group's five-year estimate in 2015.

The group's report comes as President Donald Trump seeks to invest $1 trillion 
in U.S. infrastructure. Trump has called for a "national rebuilding'' of roads, 
bridges, tunnels and airports, and has said he'll be asking Congress to approve 
legislation that leverages both public and private capital. The president met 
with airline executives and airport managers at the White House on Feb. 9 and 
said U.S. airports are part of an "obsolete'' transportation system.

Kevin Burke, president and chief executive of the Airports Council, said 
airports want to be part of Trump's infrastructure plan and urged Congress to 
increase the amount that airports can collect through fees. "We have to work 
both ends of Pennsylvania Avenue," he said at a press conference at the U.S. 
Capitol on Tuesday.

Available Funding

U.S. airports have an average of $10 billion available annually for capital 
work from existing funding sources, the council said. They currently receive 
about $3.5 billion a year in Airport Improvement Program grants from the 
Federal Aviation Administration for work including new runways and other 
construction. That money comes from taxes and fees levied on fuel and 
passengers. Airports also generate revenue by charging airlines and other 
businesses rent, and can raise funds by issuing bonds.

Commercial airports operated by a public agency can also opt to charge a 
separate fee of as much as $4.50 per passenger to fund FAA-approved projects, 
according to the agency's website. Airports are asking Trump to raise this fee, 
known as the Passenger Facility Charge.

DFW International Airport CEO Sean Donohue told a Congressional subcommittee 
last week that it was "critical" airports be able to raise the passenger 
facility charge to fund improvements. He cautioned that an increase wouldn't 
solve all the infrastructure needs and said any changes would need airline 
input.

"It's important that we continue to work with the airlines to find the right 
solution, a balanced solution, so we make the proper investments," Donohue 
said. 

Airlines for America, the trade group representing most large carriers, has 
objected to any airport-charge increases, arguing that it will tamp down sales 
and that the need for new construction at airports isn't as dire as the 
airports claim. The group, in a statement Tuesday, said that airports have 
access to funds that they aren't using, and that airports haven't identified 
any projects that were unable to move forward as a result of the airport fee 
remaining unchanged.

"Saddling passengers with more taxes is not the solution, particularly given 
the abundance of funding resources already available to airports for capital 
improvement projects," the group said.

Burke, however, said that increasing the charge would generate money for 
infrastructure without having to tap any money from the government. He added 
that it's consistent with Trump's proposal during the campaign to help fund 
infrastructure with private capital backed by tolls or user fees.

"The longer we delay, America's airports will fall behind, and our 
infrastructure needs become more expensive to fix,'' Burke said in the report.
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