Lookout! Congress Considering Increasing the Cost of Flying

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Posted by Sven Werner, Chris Prandoni on Friday, March 13th, 2015, 3:19 PM PERMALINK

In about 200 days, Congress will be reauthorizing the Federal Aviation Administration (FAA). Why should you care? Because a Congressional coalition is forming to increase passenger fees to pay for airport projects.

These potential tax increases would significantly affect passengers.

Taxes, 17 of them, already make up 21% of a plane ticket’s price. Proponents of this tobacco-like level of taxation argue that these passenger fees are necessary to support airport spending. This argument presumes that airports need the money, that these investments would not occur without government transfers. However, airports currently have $11 billion in cash holding which is around 357 days of liquidity.

Not only are airports flush with cash, they have also spent $70 billion on completed, underway, or approved airport capital projects at the nation’s 30 largest airports since 2008. Since 2000, airports revenue has increased by 65% percent to $24.5 billion in 2013. Yet, many airports are claiming poverty and that they need even more money from airlines and passengers.

In order to achieve this end, these spending interests are looking to increase the Passenger Facility Charge (PFC) cap. A one-dollar increase in the PFC cap would lead to $700 million in extra costs for passengers every year. 

Unsurprisingly, this idea isn’t a popular one: 87% of voters already think the PFC is too high; 82% of people oppose the almost doubling of the PFC and the automatic increases that come with indexing the PFC to inflation.

Most airport revenue streams are at a record high, so it’s hard to justify a tax increase. Since the federal aviation taxes have tripled since 1972 – and since 2000 there has been a 52% increase on a per passenger basis since 2000 – Congress should consider reducing taxes for passengers, not increasing them.

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