Improvements to aviation infrastructure are necessary if the U.S. plans to stay at the lead. It's simply a matter of who will pay.
More than finding themselves at cross-purposes on the Open Skies debate, the lobbying groups that represent airlines, airports, and their professionals in the United States are engaged in an uncivil war over funding of future of aviation infrastructure.
The three players are the airlines’ Airlines for America (A4A), the Airports Council International-North America (ACI-NA), and the American Association of Airport Executives (AAAE). At the heart of this debate between the ground and the skies is a controversial Passenger Facility Charge (PFC) proposed by U.S. airports which would raise funds to support improvements for airport infrastructure. The airports’ organization reports it will need $75.7 billion through 2019 to meet the requirements of an upcoming aviation infrastructure modernization bill.
To help cover these needs, airports would receive a fee up to $4.50 for each airline passenger.
Airlines disagree with the proposed PFC program. The A4A characterizes the fee as an “airport tax” and labels airport’s claims of a shortfall in funding as “a crisis of invented proportions.”
As the organization wrote this March: “The truth is airports have the resources they need. Through partnerships with the airlines, billions of dollars collected from the government and from passengers, investment-grade credit ratings, access to the bond market, and the Airport and Airway Trust Fund; U.S. airports enjoy a wide variety of funding sources to pay for capital improvement projects.”
Infrastructure costs also pitted airports against airlines on the Open Skies debate. U.S. airports argue that competition from foreign airlines could help address this funding shortfall.
That hasn’t made the airlines happy.
The Rhetoric Escalates
In the latest escalation, U.S. Airports appealed to Congress directly. As ACI-NA and the American Association of Airport Executives (AAAE) have put it:
“As public entities, airports are eager to address the needs of the communities we serve well into the future, and we recognize that the local PFC is the most free-market tool to meet the long-term needs of passengers given continued federal budget constraints. In contrast, airlines by their nature are more concerned about the next financial report and are content to say that we can get by with what we have now.”
ACI-NA has also said that airline objections to its proposed PFCs are so much “hot air.” Their argument is that $4.50 to cover airport infrastructure improvements is a pittance compared to baggage fees. Plus, they point out, airlines are not taxed for baggage fees. The profits from those go straight to airlines’ bottom lines, without contributing to the costs of infrastructure, which, they say, airlines do not cover.
“The airlines have gone to great lengths to tout their investments in airports,” airports write in an open letter to heads of the Committee of Transport and Infrastructure and the Subcommittee on Aviation. ”While many of us have worked with our airline partners over the years to build necessary infrastructure, it is misleading to point to a handful of completed projects at a select group of airports and say that our work is finished. Passenger traffic levels and airport capital needs are on the rise, and it is folly to suggest that the need to maintain runways, taxiways, and terminals, plus invest in crucial safety and capacity projects, have somehow been eliminated by the investments airlines already have either acquiesced to or made in their own self-interest.”
U.S. Tourism Thrown In the Ring
This uncivil PFC war pits U.S. tourism against airlines—just as it did with the Open Skies debate—because U.S. tourism groups have taken the side of airports on the PFC charge.
In a statement published on March 26, A4A accuses Roger Dow, CEO of the US Travel Association of becoming “a broken record” on the topic of PFC or “Airport Tax.”
“Whenever Mr. Dow finds himself in front of a crowd or a microphone, he finds a way to misinform his audience and advocate for raising taxes on Americans who fly. What’s odd is that hasn’t always been his position. In February 2005, speaking about a proposal to double aviation security taxes, Mr. Dow, then president and CEO of the Travel Industry Association of America, said: ‘A near doubling of the aviation security tax will only discourage travelers from flying for business and pleasure. This will also harm hotels, attractions, resorts, car rental firms and other travel industry companies and destinations that depend on these travelers for their economic livelihood.’ It would stand to reason that if raising taxes then would have a negative effect on the travel industry and the economy at large, the same would hold true today. So why the change? Could the reason that Mr. Dow now supports a tax hike on travelers be because the Big 10 airports–who will pad their already deep pockets with an increase to the PFC–are now filling his association’s coffers?”
To this, Jonathan Grella, Executive Vice President, Public Affairs for the U.S. Travel Association replies:
“The thing is that Roger understands the difference between a tax and a user fee, and it’s been clear for a while that the airlines do not. I’d be happy to meet up over a beer and try to explain it to them. The Big Three airlines also live in a fantasy world where their customers are happy about being herded through outdated airports and jammed onto planes like cattle, and then made to sit on the tarmac for hours. We’re trying our best to do something about the infrastructure problems the Big Three somehow believe do not exist, and I guess having to put up with personal attacks is part of the game.”
It’s the Bill, Only the Bill, Sitting on Capitol Hill
After prolonged contention, the US Congress enacted the ‘FAA Modernization and Reform Act of 2012’. That 2012 bill is set to expire this year and a new bill is under review. The new bill is intended to meet the needs of new standards under NextGen technology upgrades. The language and content of the new bill is as politically charged as in 2012. It has generated more than one heated debate the aviation industry. We expect more.
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Photo credit: This photo taken April 23, 2013 shows a Southwest airlines jet waiting to depart in view of the air traffic control tower at Seattle-Tacoma International Airport in Seattle. Elaine Thompson / Associated Press