Federal Oversight Misses the Runway on Air Travel Improvements
May 13, 2015
The U.S. aviation industry is a growing one; though demand fell during the recent recession, economic conditions have since changed. Passenger traffic is rising once again at both the domestic and international levels. The Federal Aviation Administration (FAA) expects the number of passengers carried annually to reach a record-high 775.8 million by fiscal year 2015, and continue growing up to 1.14 billion people by the year 2035.
How will airports accommodate this growth? Public policy on airport spending should be more in line with the benefit principle. According to the benefit principle, the people who use a public service should generally be the ones to contribute to that service. This approach allows projects to be approved or canceled on their own merits, by the people who best understand the costs and benefits.
- The major federal taxes on passenger air travel raised $12.05 billion for the Airport and Airway Trust Fund in 2013. This trust fund allows the Federal Aviation Administration to fund infrastructure through the Airport Improvement Program.
- Reliance on Airport Improvement Program spending is cumbersome and inefficient for airports that could be paying for the costs of their own improvements.
- The Passenger Facility Charge, an optional fee levied by and remitted to airports, also funds airport infrastructure. It has been capped at a maximum value of $4.50 per trip for fifteen years, and it has lost much of its value to inflation.
- The outdated federal cap on the Passenger Facility Charge should be raised and indexed to inflation. Alternatively, the upper limit on user fees could be set entirely at the local level.
The current restrictions on airports' ability to fund improvement projects are a poor use of federal oversight. Funding projects is an issue for passengers, airports and local governments to solve.
Source: Alan Cole, "Improving Airport Funding to Meet the Needs of Passengers," Tax Foundation, May 11, 2015.
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