As leaders in Washington debate how to pay for a much-needed national infrastructure package, one essential part should be an update of the Passenger Facility Charge, a fee attached to airline tickets used to pay for capital improvements at the airport where a flight originates. Without it, airports around the country will struggle to stay current and meet demand, and passengers and our economy will suffer.
Local airport governing boards set the fee, which cannot exceed the cap set by Congress, and they collect it only if they have a project eligible for passenger facility charge support. At Tampa International Airport, we have used the passenger facility charge to expand Airside F to support international flights, to build Airside C that now houses Southwest Airlines and to keep runways safe. The charge, however, has not been updated since 2001, and inflation has whittled away its buying power. Stuck at $4.50, it is not adequate to responsibly address the $128 billion in capital needs at the country’s airports. Among Florida airports, lost passenger facility charge capacity due to inflation tops $1 billion.
Congress created the passenger facility charge in 1990 and specified that it can only fund projects that increase airport capacity, decrease noise, improve safety and, importantly, create competition among airlines to benefit consumers.
Airports nationwide support raising the facility charge cap to serve their communities and keep the flying public safe. Conservative think tanks like the Reason Foundation and the Competitive Enterprise Institute support raising the cap, understanding that it’s a way to make infrastructure investments without federal involvement in local issues or using general tax dollars. The U.S. Travel Association, whose members include Universal Orlando, Loews Hotels and Carnival Corp., support raising the cap, understanding that airports fuel our tourism industry.
Our airline partners, whom we agree with on many issues, do not support raising the facility charge. They argue any increase in airfare means fewer people will fly. The reality is that airlines impose a host of fees that often exceed $50 each, charging for everything from printed boarding passes and assigned seats to checked and even carry-on bags. Yet, people are still flying in record numbers.
The airlines also argue they can pay for any necessary airport facilities. But the airlines will not pay for facilities for competitors to bring in new service, which can help lower fares.
This is an important point. With four airlines carrying 80 percent of the nation’s passengers, it’s vital that airports have the means to build gates affordably and bring healthy competition to the market. Using airport revenues for construction is too often subject to approval from airlines, who have an interest in limiting gates for competitors.
Tampa International’s Airside F, which serves international flights, is a perfect example. In 2011, new international carriers were expressing interest in our region. However, Airside F was at capacity. The estimated cost of an appropriate expansion totaled $25.8 million. Our airline agreement, similar to those at other airports, requires our big carriers to approve capital projects funded with more than $10 million in airport revenues. The airlines indicated they would not support the expansion. Fortunately, we had passenger facility charges and an investment from the Florida Department of Transportation to reduce the airport revenue portion of the project to $2 million, eliminating the need for airline approval.
After we completed construction, we had space for new flights to Switzerland, Panama, Germany and Iceland and additional service to London. Later this month, new service to Amsterdam begins. International traffic has increased more than 150 percent since 2010, pumping more than $1.6 billion into the region and supporting more than 18,000 jobs. The economic impact that resulted from this project would not have been possible without the passenger facility charge.
The facility charge will play a key role in funding construction of the new 16-gate airside Tampa International needs in coming years to support our growing community. Increasing the charge cap could save us hundreds of millions in financing costs on this project alone.
Raising the cap does not mean the cost of every airline ticket would increase. It would simply allow local airport governing boards to determine their community’s fate and set the fee at a rate necessary to fund eligible projects.
There’s a dire need for all types of infrastructure investment in this country — roads, bridges, transit, ports, sewage systems, communications systems. Modernizing the passenger facility charge is a smart way to invest in airport infrastructure with no impact on the federal budget, and it gives airports an essential tool for maintaining their role as economic engines for their regions.
Joe Lopano is CEO of Tampa International Airport.