Passenger Facility Charges

The Passenger Facility Charge (PFC) program was established by the Aviation Safety and Capacity Expansion Act of 1990, which was signed into law on November 5, 1990. The legislation allowed the Secretary of Transportation to grant a public agency that controls a commercial service airport the authority to impose a local fee of $1, $2, or $3 per enplaned passenger.

The law requires airports to use PFC revenue for FAA-approved eligible projects that:

• “preserve or enhance capacity, safety, or security of the national air transportation system;

• reduce noise resulting from an airport which is part of such system; or

• provide an opportunity for enhanced competition between or among air carriers and foreign air carriers.”

To gain approval for a proposed PFC increase, airports must file an application with the FAA including the proposed PFC rate, collection period and aggregate amount to be collected as well as details of the projects on which PFC money will be spent. In addition to federal approval, airports as units of local government must have local support to proceed.

Ten years after Congress created the PFC program, lawmakers raised the federal cap on local PFCs to $4.50 as part of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), which was signed into law on April 5, 2000. Large and medium hub airports that impose a PFC above a certain amount are required to “turn back” a portion of their federal funding, which in turn is used to help smaller airports finance their infrastructure projects.

While recent legislation has addressed some elements of the program, the federal cap on local PFCs has not been updated for 19 years – since 2000. During that time, construction cost inflation has eroded the value of the $4.50 to about half that amount. Meanwhile, the long list of airport infrastructure needs continues to grow. A PFC increase would help airports reconstruct aging facilities, enhance safety, and accommodate rising demand.

According to the FAA’s 2019 National Plan of Integrated Airport Systems, airports have $35.1 billion in Airport Improvement Program (AIP)-eligible projects over the next five years or more than $7 billion annually. Traditionally, airports receive less than half that amount through annual appropriations. Airports Council International – North America estimates that airports will have $128 billion in capital needs between 2019 and 2023 – approximately $25.6 billion annually for AIP-eligible and other necessary projects. That is more than three times the amount that airports received in traditional AIP funds and local PFC revenue every year.

Despite enormous needs, the FAA reauthorization bill that Congress passed in 2018 flat funded AIP through Fiscal Year 2023. If the federal government is unable to provide additional resources for airport infrastructure development, local airports should have additional flexibility to do so on their own.

PFCs are Local User Fees not Taxes: The airlines often make the erroneous claim that PFCs are taxes. But PFCs are not taxes – they are local user fees that passengers pay to help defray the costs of building airport infrastructure. Moreover, PFCs are imposed by states or units of local government – not the federal government.

PFCs are not collected by the federal government, not spent by the federal government, and not deposited into the U.S. Treasury. They are collected by the airlines on behalf of airports and remitted directly to the airports on a monthly basis minus a handling fee of $0.11.

Raising the federal cap on local PFCs would simply give airports the option to increase their local PFC if they have meaningful projects and determine that the PFC is the best mechanism for paying for those projects. It does not require airports to pursue an increase.

Status  

As Congress considers plans to upgrade the nation’s infrastructure, AAAE urges lawmakers to allow airports to build the infrastructure they need to reconstruct aging facilities, enhance safety, ensure competition and accommodate rising demand by adjusting the stagnant federal cap on local user fees.

Related Information

Talking Points/Myths and Facts

• A myths and facts piece that AAAE and ACI-NA created to respond to erroneous PFC claims made by the airlines may be viewed here.

• A two-pager on PFCs with talking points may be viewed here.

Letters/Op-Eds

• AAAE President and CEO Todd Hauptli on May 17 sent a letter to the President that highlighted the fact that significant investments in the nation’s airports can be accomplished without the need for an influx of federal dollars and without the need to raise federal taxes by simply providing airports with additional local PFC flexibility.

• AAAE President and CEO Todd Hauptli made a similar point in an Op-Ed that appeared in Aviation Daily on May 17.

• AAAE/ACI-NA/US Travel Association in February 2018 sent a letter to key lawmakers that refutes misleading PFC claims from Americans for Tax Reform.

• AAAE, ACI-NA, and AOPA on November 29, 2017 sent letters to key lawmakers urging them to support the proposed PFC increase in the Senate version of the transportation spending bill.

• AAAE/ACI-NA/US Travel Association on November 27, 2017 sent another letter to key lawmakers that refutes misleading PFC claims from Airlines for America.

• AAAE and ACI-NA in October 2017 sent letters to key lawmakers urging them to support the PFC increase in the Senate version of the FY18 transportation spending bill.

• AAAE President and CEO Todd Hauptli in February 2017 urged Transportation Secretary Elaine Chao to support airport calls to eliminate the outdated federal cap on local PFCs. 

Testimony

• Larry Krauter, the CEO of the Spokane International Airport and AAAE Secretary/Treasurer, told lawmakers that adjusting the PFC cap would allow airports to reduce their interest costs. Krauter testified before the House Transportation and Infrastructure Committee during its first infrastructure hearing on February 7.

Krauter and other airport directors and stakeholders listed below made the case for PFCs when they testified before the House Transportation Committee on March 26 during a hearing on airport infrastructure needs:
     o Candace McGraw, the CEO of the Cincinnati/Northern Kentucky International Airport and ACI-NA Chair. 
     o Joe Lopano, the CEO of the Tampa Bay International Airport.

• AAAE President and CEO Todd Hauptli urged Congress to adjust the PFC cap when he testified before the Senate Appropriations Subcommittee on Transportation Subcommittee in March 2017.

Contact

Brad Van Dam
Senior Vice President, Government Affairs
(703) 797-2534