ATA Letter to Sens. Murray and Hensarling Opposing Increase in PFC Tax

November 10,2011

 

The Honorable Patty Murray Co-Chair Joint Select Committee on Deficit Reduction 448 Russell Senate Office Building Washington, DC 20510​	The Honorable Jeb Hensarling Co-Chair Joint Select Committee on Deficit Reduction 129 Cannon House Office Building Washington, DC 20515

 
Dear Senator Murray and Representative Hensarling:

As you continue your discussions regarding recommendations to Congress to reduce the national deficit, I am writing to strongly oppose any increase in the passenger facility charge (PFC) tax. An increase in the PFC tax would not reduce our national deficit, but would instead increase the cost of travel, thereby harming both consumers and the travel and tourism industry. An increase in this tax is unjustified and would further depress demand and employment in a fragile economy.

Government, airline and concession revenues continue to be more than adequate to achieve truly needed airport development. In fact, airport revenues have reached record levels, rising to $23.5 billion annually, a 57 percent increase from 2000 to 2010. What has not increased significantly is the demand on airport facilities. The 2011 Federal Aviation Administration (FAA forecast indicates that the number of flight operations at U.S. airports will not return to 2000 levels until 2030. Existing Airport Improvement Program (AlP) and PFC revenues (which have grown from $4.4 billion in 2000 to $6.2 billion in 2010) are sufficient to cover legitimate needs. In fact, PFC revenues have rebounded and are projected to exceed $2.7 billion in 2011 and again
in 2012, approaching the record level of $2.8 billion set in 2007. Airports, like all other businesses and consumers, must learn to live within their budgets. This is a spending problem, not a funding problem.

Airlines are proud of our contribution to the nation's economy. FAA analysis shows that commercial aviation drives more than 10 million U.S. jobs and 5 percent of U.S. GDP. A healthy airline industry could contribute even more robustly. However, our industry is fragile, having lost $55 billion and 160,000 well-paying jobs from 2001-2010. If the PFC tax is increased, carriers will be pressured to raise fares, cut service and/or eliminate jobs. Volumes of air travel and air freight are already beginning to decline, and another cost increase would put further downward pressure on demand, reducing our contribution to the Airport and Airway Trust Fund, as well as the larger economy.

Our customers are already overburdened with taxes. Air travel is taxed at a higher federal rate than alcohol and tobacco, products taxed to discourage their use. Taxes on a typical $300 round-trip ticket total more than $60, or 20 percent of the ticket price. A family of four traveling to Orlando could pay $112 in PFC taxes alone for a round trip. Based on U.S. Government Accountability Office (GAO) estimates, an increase in the PFC from $4.50 to $7.00 would impose an additional $2 billion in taxes annually. Especially as uncertain economic conditions persist, the airline industry and passengers cannot afford higher taxes that inhibit growth, cost jobs and impose additional costs on consumers.

Neither of the FAA reauthorization bills passed by the House and Senate contains a blanket increase in the PFC. Rather than impose an unnecessary tax that will do nothing to reduce delays and congestion in our nation's airspace, we urge the federal government to enact policies that foster a healthy aviation industry.

We appreciate your consideration of our thoughts, and look forward to continuing to work with you and the other members of Congress to assure the safe, convenient and efficient operation of our nation's air system.

Sincerely,


Nicholas E. Calio