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"Commentary: Congress, don’t treat flyers like airport ATMs"
Tuesday, June 27, 2017
Congress, don’t treat flyers like airport ATMs
By Nicholas E. Calio, Opinion Contributor
The flying public this week will receive a disturbing message from Washington:
You’re about to become an ATM for the nation’s airports.
In anticipation of the FAA reauthorization markup, an amendment is being
proposed to remove the cap on the Passenger Facility Charge (PFC), a $4.50 tax
every flyer pays on every flight. Already, flyers are taxed at nearly 21
percent on a typical domestic round-trip ticket. If this new amendment is
adopted and the FAA reauthorization becomes law, airports would be free to
raise the PFC as high as they wanted, until flyers’ pockets are turned inside
To propose such a drastic move would seem to indicate a funding crisis — that
airports can’t afford to upgrade infrastructure and continue improving the
flying experience. But the opposite is actually true: Airports are flush with
cash and have the ability to complete whatever infrastructure projects they
wish. This tax is a solution to a problem that doesn’t exist.
The nation’s airports argued in a May 31 letter to the White House — signed by
the American Association of Airport Executives and the Airports Council
International-North America — that the PFC cap is “outdated” and “unnecessary.”
But one needs a sound fiscal argument to call for the doubling, or more, of a
tax on flyers. Instead, there is a mountain of evidence to the contrary:
•Airports have been unable to point to a single project that has not proceeded
because of a lack of funding.
•Airports collected $3.2 billion through the PFC in 2016, breaking the record
set in 2015. This year is on track to be another record-breaker.
•Passengers pay another tax to fund the Airport and Airway Trust Fund (AATF),
which supports airport improvement projects across the country. The balance of
that fund is nearly $7 billion, which is the highest level since 2001. The
Congressional Budget Office estimates that the fund will eclipse $7 billion by
the end of the 2017 Fiscal Year.
•In 2015, airline rents and fees hit a record $10.7 billion. Non-airline rents
and fees, such as parking, retail, food and beverage, reached a record $9.1
•Airports have almost $12.7 billion in unrestricted cash and investments. They
also have access to the bond market and historically low interest rates, given
airports’ investment-grade ratings.
America’s airlines would never argue against infrastructure improvements or the
much-needed efforts to upgrade this nation’s airports to the benefit of our
flyers. In fact, our industry has worked hand-in-hand with airports, and more
than $100 billion of capital projects have been completed, are underway or have
been approved at the nation’s 30 largest airports since 2008, from Washington
Dulles to Chicago O’Hare to LAX. Development is also robust at some of the
nation’s smaller airports, including Des Moines, Nashville and Reno-Tahoe.
These projects dovetail with the investments airlines are making in the
customer experience — at airports, in cabins and in mobile technology — at a
rate of more than $1.4 billion per month.
Finally, a tax of this magnitude would be bad for the economy and a drag on an
aviation industry that supports 5 percent of GDP and more than 10 million jobs.
Every $1 increase in the PFC would cost airline passengers an additional $800
million annually, a restrained estimate considering the push for no limit.
There’s good reason that Americans for Tax Reform said removing the cap would
put “an unnecessary and unfair burden” on airline passengers.
At a time when federal, state and local governments are promoting trade and
tourism to bolster our economic recovery, this tax would counteract those
efforts. Though the airports argue that this tax will help local economies, the
opposite is true. Raising the $4.50 PFC cap would discourage air travel and air
service growth to local communities, especially those rural and small
price-sensitive localities that members of Congress know will suffer
disproportionately with this tax increase.
America’s airlines support the president’s push to elevate this nation’s
infrastructure and to ensure that the nation’s aviation industry continues to
be a global leader. We’re fully committed to doing our part. But restraining
economic growth while taxing Americans is not the right path.
America’s flyers are already taxed enough. Besides, even ATMs have limits.
Calio is president and CEO of Airlines for America, the trade association for
the nation’s principle airlines.
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