Do we need airport federal funding billions to improve infrastructure?


Congress wants to make going to the airport less miserable. Travelers United says we don’t need more airport federal funding.


airport federal funding

Washington Dulles Airport

You may have noticed a series of newspaper articles noting that airports claim a lack of airport federal funding because of the pandemic. Articles say that our airports do not have enough taxpayer money to keep up with demand. That is not true.

The major infrastructure bill that should be passed this week has prompted a flurry of articles about airport federal funding.

Airport federal funding comes through three main sources and bonds. Every source has been well-funded: The FAA’s Airport Improvement Program (AIP), the Passenger Facility Charge (PFC) local user fees, tenant rents, and bonds.

Even with plenty of airport federal funding, airports in the US seem to be crumbling. It is not the fault of the federal government. It is the fault of excessive funding management. Taxpayers need to examine the operation of the airports themselves. On a per-passenger basis, the income of airports has not decreased dramatically year over year.

Why are US airports considered underwhelming according to international standards?

Irritated by hotel resort fees?The international airports are simply managed better. They make money and charge a going rate for take-offs and landings. Plus, at international airports the gates are owned by the facility. In the US gates and check-in counters are owned by the airlines. That makes competition harder because entrenched airlines keep out newcomers.

The US airports also charge a fair amount. Some airports are bargains and others are expensive, but airlines can decide which airports they want to serve. Now the federal government is looking at a giant infrastructure bill. This bill should ensure that airports can improve unless the funds are squandered. America’s consumers deserve airport federal funding that is well managed.

…not only are few US airports among the world’s best, but overall, they are in bad shape: In 2021, the American Society of Civil Engineers (ASCE) gave America’s aviation system a D+, largely because airports’ basic inefficiencies and lack of space lead to problems like delays and overcrowding. The airport grade was worse than those of other, oft-maligned parts of US transportation infrastructure, like bridges, which earned a C, and roads, which were given a D.

However, federal help for airports may be on the way. The White House and a bipartisan group of senators are working on a plan for a roughly $1 trillion investment in US infrastructure, a number that includes $25 billion for airports.

Airport managers complain of a lack of airport federal funding, They claim to not receive any direct taxes. However, airports get plenty of continuing income for operations. Plus, airline passengers are some of the highest-taxed people on the continent. For airports, the magic word is not taxes but fees.

FAA’s Airport Improvement Program (AIP)

Airports claim that the Airport Improvement Program (AIP) is inadequate. The program is funded through tax dollars. Almost $850 million was provided for this year. The FAA manages the program and makes grants directly to the airports based on passenger traffic.

The Airport and Airways Improvement Act of 1982 established The Airport Improvement Program (AIP), which continues to fund airport development today. The program originated from the Federal Airport Act of 1946, which was the first serious effort designed to create a system of national airports like the National Highway System. According to the FAA, today’s Airport Improvement Program seeks to provide safety and efficiency upgrades to airports through the use of federal grants.

Inspector General reports show that the FAA is not the best steward of taxpayer money, plus, airports have strong credit ratings.

airport federal fundingThis is an example of where the federal administration fails the public. “Because it lacks the management tools necessary to make sound funding decisions among competing projects.” Therefore, only providing more funds will not help the airport improvements. Inspector General studies have shown that most airports have strong credit ratings, allowing them to access capital markets at very favorable rates.

Again, this airport grant program has recently showered airports with almost $850 million in grants. The infrastructure program will increase the funding dramatically with no changes in the airport management itself. This is a recipe for financial disaster.

The U.S. Department of Transportation’s Federal Aviation Administration (FAA) awarded more than $845 million in grants for projects that will mitigate environmental impacts, increase accessibility, and expand capacity at airports across the United States. The funding from the fourth round of FY 2021 AIP grants will pay for projects at 388 airports in 49 states plus the District of Columbia.

“We don’t want to just build our airports back to the way things were before the pandemic. We want our airports to be better than ever — accessible to all, delivering maximum benefit to their communities, and helping directly and indirectly create jobs for millions of Americans,” said U.S. Transportation Secretary Pete Buttigieg.

airport federal fundingPassenger Facility Charge (PFC)

The PFC is funded as a direct charge on an airline ticket. Though it appears to be an airline tax it really is an airport tax — one of 17 unique taxes levied on airline tickets. Airlines have been forced to collect the tax from passengers and include it in the overall airfare. These fees (taxes) are then transferred directly to the airports.

PFCs are capped at $4.50 per flight segment. A maximum of two PFCs charged on a one-way trip or four PFCs on a round trip, for a maximum PFC of $18 total.

Travelers United believes that the PFC is adequate. It has increased directly with the number of passengers traveling through airports. You will hear airports whining that the fee is fixed and that it has not been increased in decades. However, it has increased by more than 50 percent based on the increase in passengers. Plus, every airport has the ability to float bonds at rock-bottom rates for any physical improvements wanted.

Airport parking and concessions add to the bottom line

The airport income is also helped by parking and concessions. Parking is the biggest moneymaker for airports and the scores of airport shops and restaurants all pay a percentage of sales to their airport landlord.

Airport revenues increased from $10.75 billion in 2000 to $27.4 billion in 2018. Although operating expenses have also increased, U.S. airports still generated $1.3 billion in operating income in 2018. In addition, they have $16 billion in unrestricted cash and investments on hand that can be used without external restrictions, equivalent to 396 days of liquidity.

Travelers United has not been in favor of any PFC increase. We also do not want any one of the 17 different fees increased. These fees make up the entire tax burden that American airline consumers are forced to pay for airfares. All of the fee payments are based on per-passenger assessments. Consumers pay enough for airports. They need better use of funding for their taxpayer dollars and changes in management, not only more money.

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