A House subcommittee hearing on April 8 examined the perspectives and needs of U.S. airports. The meeting of the House Aviation Subcommittee was interestingly timed. Just eleven months ago, President Biden signed a comprehensive aviation policy reauthorization bill into law (Public Law 118-63), meaning that Congress isn’t scheduled to consider more changes to aviation law until 2028. And by traditional measures, it’s still too early to judge how FAA is implementing most of the programs and requirements of the new law (particularly with a change in Administration in the interim).

But the hearing is part of the Transportation and Infrastructure Committee’s “America Builds” series, which is primarily about the reauthorization of surface transportation programs, which needs to happen by 2026. And since the last surface transportation authorization law (the IIJA) evolved into a surface-rail-air-internet-electricity-sewer-drinking water-coal mine cleanup package, the extra airport development funding provided by the IIJA by the Senate Appropriations Committee expires in 2026 as well.

The subcommittee heard from three witnesses (click on their name to read their printed testimony):

• Michael Landguth, President and Chief Executive Officer, Raleigh-Durham Airport Authority (RDU);
• Lawrence Krauter, Chief Executive Officer, Cincinnati/Northern Kentucky International Airport (CVG);
• Andre Sutton, International Vice President and Director of Air Division, Transport Workers Union of America (TWU AFL-CIO).

(It is interesting that the two airports selected to testify were both “medium hubs” – Raleigh-Durham, the 35^th-busiest passenger airport in 2023, and Cincinnati, the 49^th-busiest. The committee usually gets airports of differing sizes on a panel. However, Cincinnati is also the fifth-busiest cargo airport, because it is the national DHL hub and, now, an Amazon Air hub as well.)

Both airports had something else in common – they had both been “de-hubbed” by their dominant airlines in the past. Raleigh-Durham used to be an American Airlines hub, with significant international routes, only to be downgraded of its hub status in 1994. Cincinnati was a major hub for Delta but was de-hubbed in 2005, costing the airport two-thirds of its daily flights and annual passengers. Krauter said that CVG still has problems with its baggage moving system, which was designed to move bags between planes in a hub-and-spoke system much more than to move it from terminal to plane and back in the departure-arrival airport it is now.

In RDU’s case, this was related to their ongoing capital project nightmare, replacement of their main runway, which they tried to replace with a larger, 11,500-foot runway (long enough for big trans-Pacific flights to land), which meant the FAA forced them to do a full EIS, which added years, but then the FAA reviewed their demand forecast and decided that, not being a hub, they were never going to get trans-Pacific traffic, so they didnt need a runway that long, and the FAA wouldn’t pay for it, so they shortened the proposed runway to 10,639 feet, and then the FAA said that was still too long, then they appealed and finally won, getting a ROD in October 2023, eight years after the original application. All the while, the original runway is dying of ASR (alkali-silica reaction, a.k.a. concrete rot) and requires near-constant and expensive maintenance.

Although the hearing touched briefly on a lot of things (and the airport executives trade association helpfully included an entire regulatory platform in Krauter’s printed testimony), the hearing was mostly about money. Particularly, the Passenger Facility Charge (PFC). Both airport directors who testified, and many of the legislators at the hearing, support an increase in PFC levels as a way to fund more airport development, and the aforementioned conflict between the aviation reauthorization law timetable and the IIJA reauthorization timetable may give the airports a political advantage this time.

Background. It was, of all people, the folks in tiny Evansville, Indiana who in 1968 pioneered the practice of charging a each enplaning passenger at their airport a $1.00 “head tax” to pay for their own airport development needs. Lawsuits, of course, ensued, and the U.S. Supreme Court ruled in 1972 that these taxes did not intrude on federal interstate commerce so long as the taxes were “a reasonable fee to help defray the costs of [airport] construction and maintenance…”

In response, Congress outlawed such airport taxes/fees in June 1973 (section 7 of P.L. 93-44). But 17 years later, they reconsidered, and changed the law in 1990 (sec. 9110 of P.L.. 101-508) to once again allow airports to charge for access, this time naming it a Passenger Facility Charge (PFC). Subject to FAA approval, airports could charge a PFC of $1.00, $2.00, or $3.00 per head for a fixed period of time, to pay for airport projects. Ten years later, in 2000, Congress increased the maximum amount of a PFC from $3.00 to $4.50 (sec. 105 of P.L. 106-181). But the maximum PFC has not been increased since then, and has lost over half of its purchasing power since that time, according to RDU’s Landgruth.

There have been repeated attempts in Congress over the last decade to increase or eliminate the federal cap on PFCs, but the politics were never quite right.

The PFC program, as currently constructed, is almost maxed out as a revenue source. Per the 12/31/2024 report, every single one of the 100 busiest passenger airports was collecting a PFC, and all 31 of the “large hub” airports (10 million or more passenger enplanements per year) was collecting the maximum $4.50 PFC.

There is a wide variety of size here. At the busiest U.S. airport, Atlanta Hartsfield, $4.50 per enplanement translates to about $230 million per year. At the least busy “small hub” airport (Medford, Oregon), their recently approved $4.50 PFC will bring in somewhere around $2 million to $2.25 million per year.

Then the IIJA came along and added $20 billion over five years in airport grants on top of the existing Airport Improvement Program and airport PFC proceeds. Those funds, for an AIP-like Airport Investment Grant program and for a “groundside” Airport Terminal Program, will expire at the end of the IIJA in September 2026, long before the FAA authorization law expires at the end of 2028.

Accordingly, under current law, even though last year’s authorization increased AIP funding by $650 million per year, effective in 2024, in 2027, total federal grants for airport will drop by $3.8 billion per year, or about one-third.

Lifting the $4.50 cap on the PFC would allow the charges to produce significantly more than $4 billion per year once the IIJA expires.

Republican leaders seem dead-set against extending the various general fund “advance appropriations” from the IIJA, which includes all of the IIJA’s airport development funding. But the timing presents a custom-made opportunity for the airport lobby to push for a PFC increase in the context of an overall infrastructure bill, to pay for the money being lost by the expiration of the IIJA advances, but doing so in a way that does not affect federal deficits or federal debt.

The subcommittee hearing was chaired by new chairman Troy Nehls (R-TX), but a lot of questioning was done by Rep. Thomas Massie (R-KY), whose local airport is CVG, run by the second hearing witness, Krauter. Massie was the primary Republican co-sponsor of former chairman Peter DeFazio’s (D-OR) bill several Congresses back to lift the PFC cap, and Massie had his own amendment to the last FAA bill in committee lifting the PFC cap, but withdrew it when he saw the votes were not there.

Throughout the hearing, both airport witnesses did not miss any opportunity to extol the greatness of the PFC nor their urgently felt need to increase the $4.50 cap or eliminate it altogether.

One of the other issues that would have been addressed by Massie’s 2023 amendment would have been to take any airport that levies an above-$4.50 PFC out of eligilbity for the Airport Improvement Program, thereby increasing the size of the slices of the funding pie that other, smaller airports would receive.

In terms of what happens if Congress neither maintains IIJA funding levels after 2026 nor allows an increase in the PFC, Krauter said that the lack of new capacity would mean an increase in the number of airports that have to be slot controlled and then, “it’s the Hunger Games” and airport versus airport and smaller communities may be left out of access to the big hubs like Atlanta.