Would Nearly Double The Passenger Facility Charge Tax

Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, today urged Senators to oppose the unreleased Transportation, Housing and Urban Development Appropriations Subcommittee effort to increase the Passenger Facility Charge (PFC) tax. While the Committee has not made the bill language public, airport sources indicate that the Subcommittee voted today to increase and nearly double the PFC tax from $4.50 to $8.50 which would result in a massive $3.2 billion tax hike on every air traveler who takes to the skies.

“Airline passengers already pay over $20 billion a year in taxes for the tickets they purchase. Adding another $3.2 billion tax hike on American travelers simply cannot be justified. The truth of the matter is that airports are flush with cash. It is 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 funds. Congress has access to over $7 billion in unobligated tax revenue sitting idle in the aviation trust fund that could be used instead of raising taxes. Choosing to increase this tax is a completely unnecessary poke in the eye and wallet of air travelers. We urge Senators on both sides of the aisle to stand with the 2.4 million people who fly every day by sending a message that tax hikes simply won’t fly,” said A4A president and CEO Nicholas E. Calio.

If enacted, raising the Airport Tax from $4.50 to $8.50 means:

• Travelers who fly will be hit with an additional $3.2 billion in taxes.
• The tax bite on an average $300 round-trip ticket would increase to $78, or 26 percent (up from $63, or 21 percent they pay today).
• An extra $64 for a family of four taking a round-trip connecting flight.

Congress has repeatedly rejected raising airport taxes because there is no basis to support such an increase. "Our industry works hand-in-hand with airports. 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, Los Angeles and LaGuardia. Development is also robust at the nation’s smaller airports, including locations like Des Moines, Nashville and Reno-Tahoe," Calio said.

Asked at a Congressional hearing to supply a list of projects to support an increase, airports have been unable to point to a single project that has not proceeded because of a lack of funding.

According to financial reports filed with the FAA, airport revenues are at record levels. Airports collected over $27 billion in 2015, including record high airline rents and fees as well as non-airline rents and fees (i.e. parking, food and beverage, retail and duty free).

Airports collected $3.2 billion through the PFC in 2016, breaking the record set in 2015. 2017 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.

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.

The A4A has taken the position that the tax increase must be rejected.

(Source: A4A news release)

FMI: www.airlines.org