Correction: LaGuardia Airport’s Terminal B project is on schedule and on budget.
By now most Americans have absorbed President Trump’s proposed budget on topics ranging from health care to privatizing the nation’s air traffic control system. On the issue of travel, and the even more specific issue of aviation, you’d be forgiven for being confused.
How do we undertake public works projects while cutting budgets? How do we improve infrastructure while simultaneously reducing taxes on the entities that benefit from it? Simply put, just who exactly is supposed to pay for our aviation network’s daily maintenance and upkeep, let alone airport improvements and expansion?
There are a finite number of sources available for funding our airline infrastructure. And each is problematic in its own way.
Closing the gaps
In February, the president told Congress “crumbling infrastructure” will be replaced with new airports and other projects, “gleaming across our very very beautiful land,” and called for a $1 trillion investment. But the old Congressional joke about “a billion here, a billion there, pretty soon, you’re talking real money” certainly rings true.
The experts at the American Society of Civil Engineers — who recently gave our infrastructure a grade of D+ — claim there’s a total $2 trillion investment gap through 2025, with a $42 billion shortfall for airports alone. ASCE states: “Infrastructure owners and operators must charge, and Americans must be willing to pay rates and fees that reflect the true cost of using, maintaining and improving all infrastructure,” including transportation.
This is entirely sensible, but easier said than done. Who will foot such bills? The federal government? States and municipalities? Airlines? Airports? Passengers? Taxpayers who don’t fly?
Furthermore, any discussion of the federal/state/local funding paradigm can’t myopically focus on a specific sector such as aviation without addressing budget proposals affecting everything from school lunches to health care to environmental protection. In other words, the question isn’t: How will states and municipalities fund aviation? Instead it’s: How will they fund aviation in addition to everything else?
Taxes and surcharges and fees — oh my!
As recently reported, President Trump wants to raise the mandatory September 11th Security Fee to cover 75% rather than 40% of the Transportation Security Administration’s costs, even while slashing TSA’s total budget. The current passenger fee is $5.60 one-way, capped at $11.20 round-trip, and estimates are this will rise by $1. Previously the TSA imposed an Air Carrier Fee on airlines, but this was repealed in 2014.
Aside from security, much of the funding for domestic airports comes from two key initiatives. First is the FAA’s Airport Improvement Program, which provides grants for planning and development projects. Second, the FAA oversees the Passenger Facility Charge Program, which is used “to fund FAA-approved projects that enhance safety, security or capacity; reduce noise; or increase air carrier competition.”
Currently airport PFCs are allowed up to $4.50 for every enplaned passenger, up to two charges per one-way trip or four per round-trip, totaling a maximum of $18. According to the FAA, PFC collections are estimated at $3.13 billion in 2016 and $3.22 billion this year.
While critics portray PFCs as taxes, in truth they’re user fees paid by those who benefit from flying. It’s a critical distinction made clear in a recent Congressional hearing: “Because the AIP does not cover all airport capital needs, Congress has authorized airports to collect a fee on passengers … A PFC is approved by the federal government, collected by the airlines and paid directly to the airport without going through the federal Treasury.”