Airports including Atlanta’s are pushing for an increase in ticket fees that help pay for improvements, while airlines vehemently oppose the hike.
The U.S. Senate Appropriations Committee this week approved legislation that included an increase in the maximum passenger facility charge, or PFC, from $4.50 to $8.50. For a nonstop, roundtrip flight from Atlanta that would typically mean an an increase from $9 to $17.
The proposal is likely to be contentious if it advances through Congress. A House version of the bill did not include an increase in the PFC.
Airports for years have pushed for an increase, saying they need the money for improvements. An earlier attempt to raise the maximum on a flight segment to $7 made it into a House bill but did not survive in the final version passed in 2012.
Now, the airport lobby has gained fresh energy with the surprise inclusion of the increase in a transportation and housing appropriations bill passed by the Senate committee.
“Improving terminals to accommodate more gates, bigger seating areas, and modern security checkpoints will result in shorter lines, lower airfare and a better passenger experience,” according to Washington-based airport lobbying group Airports Council International - North America.
Hartsfield-Jackson supports the measure, said spokesman Reese McCranie. “The sole purpose for PFCs is to improve the passenger experience at airports and prepare the airport for future growth,” he said.
Delta Air Lines and other carriers are against an increase.
Atlanta-based Delta issued a statement this week saying “hard-working Americans should not have to abide another tax increase on their plane tickets.”
Airline lobbying group Airlines for America, which represents other major carriers, also released a statement saying the boost would translate to a “tax hike on American travelers (that) simply cannot be justified.”
The PFC was authorized in 1990 by Congress. Hartsfield-Jackson charges the maximum $4.50, as do most big U.S. airports. Nationally, total PFC collections totaled about $3.2 billion in 2016.
PFCs are levied for each flight segment, so people making connections pay more. The current cap is $18 per round trip. That would rise to $26 under a new formula in the legislation.
Money from PFCs is used for expansions and projects that improve safety or security, reduce noise or increase airline competition. In Atlanta the PFCs contributed about $300 million for the $1.28 billion fifth runway and helped pay for the international terminal.
Airports Council International said airports need nearly $100 billion in new infrastructure between 2017 and 2021. The group says the cap on PFCs has remained at $4.50 since 2000, while the levy’s purchasing power has declined to the equivalent of $2.42 today.
The group applauded the Senate appropriations committee vote, calling it a “bipartisan effort to modernize America’s aging airport infrastructure.”
President Donald Trump as a candidate decried America's "third world" airports. But during a meeting with airline and airport CEOs in February, he said: "I don't like raising fees or taxes… The last thing we have to do is raise the fee. I understand what you're saying, but $4.50 — it's a lot when you look at all of the passengers."
Hartsfield-Jackson is starting a long-range, $6 billion expansion and modernization, with terminal renovations underway and plans to build Concourse G, construct new parking garages, install a massive canopy over curbside areas and eventually add a sixth runway.
About $1.7 billion of the total could come from PFCs, McCranie said.
In fiscal 2016 Hartsfield-Jackson brought in $201 million in passenger facility charges, out of a total of $765 million in revenue, including rent payments from airlines and other airport users, landing fees and parking, car rental and concessions revenue. Total expenses were $640 million, according to its annual financial report.
Airports including Hartsfield-Jackson also issue PFC-backed bonds to fund capital improvement projects. In total the airport has about $259 million of debt to repay annually.
“The truth of the matter is that airports are flush with cash,” Nicholas Calio, president of Airlines for America, said in a statement.
Calio called it “disingenuous at best for Congress to repeatedly saddle traveling families and businesses with tax-hike after tax-hike while airports are sitting on billions in unused fund… Choosing to increase this tax is a completely unnecessary poke in the eye and wallet of air travelers.”
Delta says studies show that every $1 increase in PFCs would cut demand more than 1 percent.
Airports Council International spokesman Scott Elmore called that claim “disingenuous, especially when you consider the revenue they collect in bag fees.”
Some libertarian and conservative Washington think tanks, including the Competitive Enterprise Institute and the Tax Foundation favor boosting or removing the cap on PFCs.
The Tax Foundation has said with the PFC, “passengers fund the airports they are using,” reducing reliance on federal taxes.
The U.S. Travel Association, a travel industry lobbying group, calls a PFC increase “a long-overdue win for travelers and the U.S. economy.”
“Improving airport infrastructure was a core campaign promise for the president,” the travel association said.
But consumer group Travelers United called the proposed increase “a disappointing victory of business interests and big airports over airline passengers… Everyday travelers and business travelers will pay more for every flight in the U.S.”
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