Industry Insights

Airport Tax Hikes Simply Won’t Fly

June 21, 2019

A more accurate title for a recent piece in the Washington Examiner titled “The first step to fixing busy airports this summer” would be “Higher taxes for anyone who flies.”

The reality is airports are looking to make air travel more expensive for everyone who flies even though the coffers are already full.

Airport executives are right to point out that there will be more people taking to the skies this summer. A4A’s recent travel forecast projects another record-setting summer with over 257 million passengers expected to fly on U.S. carriers. And, the flying public already is seeing airport improvement projects going on at airports of all sizes across the country. More than $200 billion has been invested in airport improvement projects across the country since 2008.

There already are a variety of funding sources that U.S. airports can tap into before asking passengers to shoulder a tax increase. Unlike the Highway Trust Fund, which is struggling just to remain solvent, the Airport and Airway Trust Fund (AATF) is valued at more than $7 billion and is projected to hit $47.7 billion in the next ten years, money that could be spent on airport infrastructure. Airports also have $14.5 billion in cash on hand – roughly 381 days of liquidity – which is up nearly 50 percent from the 2010 level. Tax hike advocates make a point of saying that Congress hasn’t increased this tax on passengers since 2000, but they don’t mention that PFC revenue has more than doubled in that time, going from $1.6 billion to a record $3.5 billion in 2018 and projected to increase again in 2019. And PFCs only make up a portion of the more than $30 billion in record revenue that airports collected last year.

With all of these resources at their disposal, it’s simply irresponsible to ask customers – who already pay $6.9 billion each year in taxes supporting U.S. airports – to pay even more. Congress should see this for what it is, a cash grab by airports on the back of people who fly.

Additionally, it is imperative to call out an egregious conflation of two very important issues – the diversion of Customs and Border Protection (CBP) and Transportation Security Administration (TSA) staff to our southern border and the debate over a PFC hike. Unnecessarily raising taxes on everyone who flies will not do anything to lessen the impact of continued staff diversions. We agree that CBP and TSA staff diversions have the potential to create long lines at airports this summer, but the solution is for Congress to authorize the supplemental funding that both airlines and airports support. Using this potential situation as an end around to call for a tax hike is just as irresponsible as asking for one in the first place.

There’s only one way to look at what the airport community is asking for – a tax hike on passengers that simply won’t fly.