Airports Seek Funding Solutions Amid PFC Cap Stalemate
U.S. airports face a critical funding shortfall for essential infrastructure improvements as Congress maintains the passenger facility charge (PFC) cap, prompting Airports Council International-North America (ACI-NA) President and CEO Kevin Burke to call for alternative financing strategies.
During an interview at the annual ACI-NA Conference and Exhibition in Grand Rapids, Burke emphasized the urgent need to raise the PFC cap beyond the current $4.50 per flight segment limit, established in 2000. This charge, collected from passengers by airlines, is crucial for funding airport projects across the nation’s publicly owned and municipally managed airports.
The recent five-year FAA reauthorization bill, passed earlier this year, kept the PFC cap unchanged at $4.50 per flight segment. Under this cap, passengers pay a maximum of $4.50 per segment, totaling $9 for one-way trips with connections and $18 for roundtrips. The FAA projects PFC collections to reach $3.7 billion in 2024 and $3.8 billion in 2025, supporting various airport improvement initiatives.
However, Burke warns that these funds are insufficient to meet the escalating infrastructure needs. The ACI-NA estimates that U.S. airports require $151 billion for projects from 2023 to 2028, far exceeding the combined contributions from the FAA’s Airport Improvement Program (AIP), infrastructure legislation, and current PFC collections. In 2024 alone, the AIP funding increased to $4 billion, yet this remains a fraction of the total requirement.
Airlines oppose increasing the PFC, labeling it a “tax” on passengers, which they argue could deter travelers, especially families and those from smaller communities who frequently use connecting flights. For instance, a family of four could see their PFC expenses double from $72 to $144 per roundtrip if the cap is raised.
Despite airline resistance, Burke contends that a modest increase in PFCs would not significantly impact passenger numbers, particularly if travelers understand that the additional charges support vital airport enhancements. “The number hasn’t been adjusted in over 20 years,” Burke stated. “From an inflationary perspective, that $4.50 is worth about $2.”
The stagnation of the PFC cap has led to increased reliance on debt to fund airport projects, limiting the direct allocation of PFC funds to infrastructure. In 2022, $2.8 billion of the $3.3 billion in PFCs collected went towards offsetting debt service, according to ACI-NA data.
Looking ahead, Burke suggests that without a PFC increase, airports may need to explore alternative financing models, such as public-private partnerships (P3s). These partnerships, common in Europe, involve private companies managing and developing airport infrastructure under long-term leases with government entities. An example is the New Terminal One (NTO) consortium at John F. Kennedy International Airport, which is constructing a new terminal with a projected cost of $9 billion under a lease through 2060.
Burke remains optimistic about future PFC adjustments, despite the current legislative impasse. “If Congress or the airlines continue to block a PFC increase, we will have to go to a plan B,” he asserted. “With $151 billion in infrastructure needs, the number will only grow.”
Fitch Ratings highlighted that even with increased AIP funding, most large and midsize airports will continue to depend heavily on debt for infrastructure projects. This dependency restricts the direct use of PFC funds for improvements, further exacerbating the funding gap.