Letters:

Supporters of the Aviation and Travel Industry on the Passenger Facility Charge (PFC) and Airport Improvement Program (AIP) PFC & AIP Letter
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AASHTO Standing Committee on Aviation

on

FAA Reauthorization

General

  • This year Congress has a golden opportunity to improve the nation’s infrastructure by passing a multi-year aviation FAA reauthorization bill that gives airports the resources and tools they need to construct the runways, taxiways, gates and other projects to meet the challenge of a growing aviation system estimated to have one billion annual passengers by 2015.
  • Congress should provide resources for air traffic modernization and take steps to improve the system of air traffic control to ensure that airlines, airports, general aviation, passengers and others are consulted on the technologies and procedures that promise to improve the functioning of today’s air traffic control system.
  • Congress needs to continue its support for the Essential Air Service and Small Community Air Service Development programs to give service-deprived communities, which rely on air service, the opportunity to attract new air carrier service.In the last seven years, it is these communities that have most often lost all commercial service or faced the loss of significant markets and/or frequencies (non-hub airports, for example, have lost about 25% of their traffic in the last seven years).

Airports

  • Congress should support a strong Airport Improvement Program—providing key capital funds to airports of all sizes for safety and capacity projects—at a level of $3.8 billion (2008), $3.9 billion (2009), $4.0 billion (2010) and $4.1 billion (2011).As it does so, it should provide reliable entitlement funding for small-hub and non-hub airports, combined with assistance for general aviation airports.Because these airports cannot readily access the financial markets for revenue-bond financing, AIP is often the only source of capital available.Also, Congress should provide a strong discretionary program to fund letters-of-intent for major capacity projects (e.g., Chicago O’Hare’s modernization program), as well as for larger projects for airports of all sizes.
  • Congress should support an increase in the Passenger Facility Charge ceiling from its current $4.50 to $7.50.These federally authorized, local sources of revenue provide larger airports with a reliable source of capital to back airport bonds and to fund capital programs on a current year basis.They also provide a key source of revenue for smaller airports, which often use PFCs as a source of local matching funds for federally backed projects.Because the PFC ceiling has not been increased for the last seven years, it has not kept up with project-cost inflation (as measured by the Means Construction Cost Index).The result is in today’s dollars the $4.50 PFC is worth $2.86.Increasing it to $7.50 and indexing it to project-cost inflation, would give airports the ability to fund necessary projects.Without an increase, many airport projects simply will not be built, placing the airport industry in a position of not having the infrastructure necessary to meet forecasts.

Airport and Airway Trust Fund

The Airport and Airway Trust Fund (AATF) was originally designed to provide a stable source of capital funds for aviation capital needs, specifically airport and airway infrastructure. Unfortunately in recent years, because of a limitation of funding for the FAA, together with a fast growing FAA Operations account, more and more of AATF revenue is being used for operations, resulting in some reductions to AIP and large reductions in the Facilities and Equipment (F&E) account.

  • Congress needs to reauthorize both AIP and F&E and, through budget rules, protect the accounts against future reductions caused by fiscal pressures.
  • Congress also needs to provide a stable source of general fund support at a minimum of 25% of the total FAA budget in order to recognize the contributions that the aviation system makes to the greater community and to discourage the practice of diverting AATF revenues for operations.

Funding System Needs

  • Congress and the FAA should agree on approaches to supplement the current AATF, including providing sufficient general fund support, excise taxes, and fuel taxes.A balance among these sources ensures that all who benefit from the system—the community, airline passengers, shippers, and general aviation operators—make a contribution to supporting the system infrastructure from which they derive benefits.Where appropriate, these funding sources should be indexed against inflation to guard against cost increases

A Timely Reauthorization

  • It is imperative that Congress reauthorize FAA programs and the taxes, fees, and charges that fund aviation programs before the end of Fiscal Year 2007 (September 30, 2007).This will ensure that there will be no disruption to the aviation system.While a multi-year authorization is highly preferable, under no circumstances should Congress permit the authorization or taxes to lapse; if necessary, Congress should pass a short-term extension of authority so that a multi-year bill can be completed.