US airlines largely escaped any stinging regulations during the first year of Donald Trump’s presidency; but the nation’s largest carriers are now banding together to urge Transportation Secretary Elaine Chao to reject a doubling of the passenger facility charge (PFC) tax proposed by a subcommittee in the US Senate.
After Donald Trump was elected US president in late 2016, most airlines enjoyed a “Trump bump” in demand, and more recently US airlines have touted the benefits of new tax regulations pushed through the Republican-controlled US Congress. Additionally, the US Department of Transportation did not issue any onerous consumer-oriented regulations during the first year of the Trump presidency.
Although Alaska Airlines, American Airlines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines and United Airlines do not see eye-to-eye on all issues, those airlines are uniting to oppose a potential doubling of the PFC preferred by the US Senate Transportation, Housing and Urban development committee. PFCs are taxes collected by airlines on air fares that are used by airports to fund FAA-approved projects, and the committee believes the fee should increase from USD4.50 to USD8.50 for every enplaned passenger.
Those airlines argue airports receive billions of dollars from both customers and the US government, which results in the airport community obtaining access to multiple sources of revenue. The six carriers cited several examples to support their arguments including the USD11.4 billion US airlines collected in 2016 from rents and fees, USD32. billion from existing PFCs and USD9.7 billion in non-airline revenues. US airports during 2016 also had more than USD14.2 billion of unrestricted cash and investments, they contend.
Conversely, 17 unique taxes and fees are imposed by the US government on airfares totalling more than USD24 billion. Those taxes and fees represent roughly 21% of the total cost of a round-trip ticket, the airlines concluded.
“As you lend your voice to the funding debate, we respectfully ask for your commitment to solutions that do not involve unnecessary tax increases on the travelling public,” the airlines stated to Ms Chao.
Unsurprisingly, US airports have a different perspective. Airports Council International North America (ACI-NA) has estimated US airports have USD100 billion in infrastructure needs spanning from 2017 to 2021. The group is pushing for the lifting of caps on PFCs, arguing the US Congress should “give airports the locally controlled self-help they need to finance infrastructure projects by eliminating the federal cap on the PFC”.
PFCs have long been a point of contention between US airlines and airports. It remains to be seen if the proposed increase will materialise; but an increase in PFCs was not included in a 2019 budget proposal released by the Trump Administration in mid-Feb-2017.