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Passengers on commercial airlines have narrowly avoided facing higher expenses.
The House of Representatives recently passed the Securing Growth and Robust Leadership in American Aviation Act, a bipartisan bill that reauthorizes the Federal Aviation Administration.
Rep. Thomas Massie, R-Ky., a champion of small government with libertarian leanings, proposed an amendment to the bill that aimed to raise the cap on the Passenger Facility Charge (PFC). This charge is a fee authorized by Congress and imposed by airports on air travelers.
Taxes and fees can constitute more than 20% of the price of a domestic airline ticket.
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If approved, Massie’s amendment would have raised travel expenses for everyday Americans, hindered competition in the aviation industry, and burdened small businesses.
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Fortunately, Massie’s amendment was not added to the bill, highlighting the need to definitively reject any increase in the PFC.
The PFC is a fee collected by government agencies from airline passengers at commercial airports controlled by state and local governments, including major airports. As stated on the FAA website, the current PFC allows airports to collect fees up to $4.50 per eligible passenger, with a maximum of $18 for a round trip.
This fee is already included in the ticket price and is just one of the many taxes and charges imposed on air travel. In fact, taxes and fees can exceed 20% of the cost of a domestic flight.
Interesting findings from a 2018 study conducted by the RAND Corporation, funded by Congress, suggested an increase in the PFC cap. Massie’s proposed amendment aimed to raise the cap from $4.50 to $8.50 per passenger.
Advocates for raising the PFC cap argue that it should keep up with inflation and that airports need more funds for improvement projects. However, revenue per passenger from PFC fees has far outpaced inflation since 2000, and the Government Accountability Office cautioned in 2014 that an increase could potentially slow passenger growth and revenue to the Airport and Airway Trust Fund (AATF).
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In other words, increasing the PFC cap could ultimately reduce funds available to airports, contradicting the stated policy goal.
Moreover, Congress recently allocated $25 billion for airport improvements through the Infrastructure Investment and Jobs Act. There is simply no need for the government to further burden commercial air travelers.
Some proponents argue that raising the PFC cap promotes competition among airlines. However, higher ticket prices resulting from a cap increase would harm smaller airlines that offer low-cost airfares. It comes as no surprise that low-cost airlines have publicly opposed any cap increase.
Others claim that increasing the PFC cap would foster competition among airports. This argument has been debunked by Americans for Tax Reform, a conservative advocacy group. The PFC is governed by the government, collected by airlines, and returned to the airports. For the charge to genuinely encourage airport competition, airports themselves would need to collect it, allowing consumers to hold them accountable for pricing.
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An increase in the PFC cap would also have negative effects on the broader economy. The Small Business and Entrepreneurship Council, a nonpartisan research organization focused on protecting entrepreneurship, has actively opposed PFC cap increases. Small businesses already suffer from inflation, burdensome taxes, and stringent regulations. Imposing unnecessary costs on their operations would hinder competition in the economy.
Thankfully, the Securing Growth and Robust Leadership in American Aviation Act will not entertain a PFC cap increase. The disadvantages of such a policy are evident, and it is crucial to lay this debate to rest.
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