Airports and influential travel industry leaders are urging Congress to nearly double a federally mandated facility tax on passengers, but the airline companies believe it's unnecessary.
The tax, known as the Passenger Facilities Charge, is added to the cost of plane tickets and is levied by individual airports, according to The Daily Caller. Airports use these fees to fund projects that increase airport safety, expand facilities and reduce noise, according to the Federal Aviation Administration.
Created in 1992 with an initial cap of $3 per flight and $12 per round trip, airports and travel industry leaders now say inflation has reduced the real value of the tax to about $2.50. The tax was raised to $4.50 per flight and $18 per round trip in 1994
The solution, according to the industry, is for Congress to nearly double the cap to $8.50 and index future increases to inflation, which could be done when lawmakers vote on legislation to reauthorize the Federal Aviation Administration later this year.
The American Association of Airport Executives said in a December press release that the increase would "restore lost purchasing power and ensure that airports don't lose ground in the future as costs increase," the Daily Caller reported.
"Airlines will likely collect more than $3.5 billion in luggage fees in 2014 - and amount that dwarfs the $2.5 billion that the nation would realize ... if our PFC proposal were adopted," said President and CEO of the AAAE, Todd Hauptli. "Keep in mind that those resources would go directly to building infrastructure important to airlines."
In a speech delivered last week to the U.S. Conference of Mayors, U.S. Travel Association CEO Roger Dow voiced his support for the tax hike and criticized U.S. airlines for standing in the way.
"We can't have airports that are the top system in the world if we're not willing to pay for them," reported Politico.
Airports are "the front door to economic growth," Dow said, however, he acknowledged that such a passenger fee hike "appears unlikely at the moment" because "House Republicans are resistant to any type of revenue hike and airlines were able to fight off a similar hike four years ago."
The Airlines for America trade association published a blog post in response to Dow's claims, saying, "U.S. Airlines are committed to enhancing the passenger experience at airports as well as in the air."
"But, much to Mr. Dow's displeasure, the industry also is committed to the principle of good stewardship and responsible spending of the resources available for airport improvements."
Dow forgot to mention that since 2008, "U.S. airlines, together with airport partners, have invested more than $52 billion in airport infrastructure," Airlines for America said.
"The bottom line is that raising the PFC will increase the overall cost of air travel for Americans," the group said. A tax increase could "set back job growth, negatively impact travel and tourism" and "limit air service to small and rural communities."
"These are not theoretical concerns. A recently released U.S. Government Accountability Office report affirms this negative impact from an increased PFC," the blog post reaffirmed.
Senior Vice President of Legislative and Regulatory Policy for Airlines for America, Sharon Pinkerton, explained to The Daily Caller why raising the PFC is unnecessary.
"Most airport funding is already paid for by passengers through ticket taxes, the revenue from which goes into the Aviation Trust Fund," which in turn assists with airport projects.
According to Pinkerton, there is already $6 billion "unobligated" in the trust fund, nearly double the amount disbursed annually by the fund. Airports have "another $11 billion in cash on hand, which is about a year's worth of operating expense for the approximately 450 airports around the country."
She concluded that the airlines would indeed like to upgrade the nation's airport infrastructure, they "just don't think it needs to be done on the back of customers who already pay so much," according to The Daily Caller.
