Commercial airline passengers just dodged a bullet.
The House of Representatives recently passed the bipartisan Securing Growth and Robust Leadership in American Aviation Act, which would reauthorize the Federal Aviation Administration.
Rep. Thomas Massie, R-Ky., who is typically a libertarian-minded-advocate of small government, proposed an amendment to the bill that would increase the cap on the Passenger Facility Charge (PFC), a congressionally authorized fee that airports charge air travelers.
Such an amendment, if approved, would have made air travel more expensive for everyday Americans, harm competition in air travel, and hurt small businesses by raising their travel expenses.
Luckily, Massie’s amendment was not be added to this bill, but the movement to raise the PFC must be quashed for good.
The PFC is imposed by the government on airline passengers at commercial airports controlled by state and local governments, which includes almost all major airports. At the moment, as written on the FAA website, “the PFC allows the collection of PFC fees up to $4.50 for every eligible passenger at commercial airports controlled by public agencies. PFCs are capped at $4.50 per flight segment with a maximum of two PFCs charged on a one-way trip or four PFCs on a round trip, for a maximum of $18 total.”
This charge is included in the price of airline tickets and is one of many taxes and fees the government packs into the cost of air travel. In fact, taxes and fees can make up more than 20% of a domestic airline ticket.
Interestingly, a congressionally funded study conducted by the RAND Corporation in 2018 recommended that legislators increase the airport’s PFC cap, and Massie’s proposed amendment would have done just that, increasing the cap from $4.50 per passenger to $8.50.
Proponents of raising the PFC cap often argue that the fee airports charge must be allowed to keep up with inflation, and they assert that airports need more cash to fund improvement projects. However, airports’ increase in revenue per passenger from PFC fees has far outpaced inflation since 2000, and the Government Accountability Office in 2014 warned that a PFC increase “could also marginally slow passenger growth and therefore the growth in revenues to the Airport and Airway Trust Fund (AATF).”
In other words, an increase in the PFC cap could ultimately reduce the funds available to airports, the exact opposite of the stated policy goal.
Furthermore, through the Infrastructure Investment and Jobs Act, Congress recently provided a $25 billion investment of taxpayer money for airport improvements. There is simply no need for the government to stick its hands even deeper into the pockets of commercial air travelers.
Some pro-market advocates, such as Marc Scriber, a senior transportation policy analyst at the libertarian Reason Foundation, argue in favor of increasing the PFC cap as a means of promoting competition among airlines. But the resulting higher ticket prices from raising the PFC cap would harm smaller airlines that attract customers through low-cost airfares. As a result, it’s no surprise that low-cost airlines have been vocally opposed to any cap increase.
Others argue that a PFC cap increase would foster competition among airports. Americans for Tax Reform, a politically conservative advocacy group, rightly calls this “nonsense.” The PFC is imposed by the government, collected by airlines, and handed back to the airports. For a raise in the PFC cap to encourage competition among airports, the charge would have to be collected by the airports themselves to give consumers a better opportunity to hold them responsible for the prices imposed.
A PFC cap increase would also have negative impacts on the broader economy. The Small Business and Entrepreneurship Council, a nonpartisan research organization focused on protecting entrepreneurship, has conspicuously come out in opposition to PFC cap increases. Small businesses are already hurting from inflation, burdensome taxes and strict regulatory environments. They do not need more unnecessary costs placed on their operations, which would hinder competition in the economy.
Thankfully a PFC cap increase will not be further considered in the Securing Growth and Robust Leadership in American Aviation Act. The downsides of this policy are clear. This debate must be put to rest, not reignited at some later date.