More Airport Taxes Just Won’t Fly
GBTA Urges Congress to Reject a PFC Increase
Currently, some in Congress want to double the current Passenger Facility Charge (PFC), and others even want to remove the cap altogether, meaning airports would be able to increase the PFC as much as they want. Today, GBTA joined Travelers United, Americans for Tax Reform and Airlines for America in opposition to raising the PFC. The groups provided specific data showing why airports do not need additional funding for airport improvement projects. This comes ahead of a House Transportation & Infrastructure Committee hearing, scheduled for tomorrow, Tuesday, March 26, focused on increasing the PFC – the so-called Airport Tax which is paid by the 2.4 million people who travel by air in the U.S. every day.
GBTA’s Vice President of Government Relations Shane Downey delivered the following remarks:
The Global Business Travel Association (GBTA) is the world’s premier business travel and meetings trade organization headquartered in the Washington, D.C. area with 40 state chapters and operations on six continents. GBTA’s 9,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually. GBTA delivers world-class education, events, research, advocacy and media to a growing global network of more than 28,000 travel professionals and 125,000 active contacts.
GBTA members work for the majority of Fortune 100 companies, buying, sourcing and managing the corporation’s travel budget, among other responsibilities. In a well-managed travel program, a corporation can see a return on investment of $20 for every $1 spent.
Air travel is a major part of business travel and corporate spend. GBTA research on the U.S. economic impact of business travel shows 515 million domestic business trips are taken in a year. Nearly 30 percent involve air travel – second only to personal vehicles – meaning business travelers take to the skies on over 144 million trips a year.
During 2018, several attempts were made by Congress to increase the Passenger Facility Charge (PFC) by $3.50 to $8.00 per boarding – with some attempts to remove the cap altogether. We are once again facing a push to increase the PFC.
Proponents cast it as a small increase, but they leave out how other government taxes and fees are applied to air travel. When factoring in this increase along with the 9/11 Security Fee for a one-stop round-trip airfare, the cost of a single ticket increases by $43.20. And, when the 7.5 percent excise taxes are applied to a $200 airfare, the taxes and fees alone would total $58.20 for just one individual.
While this is a large increase for an individual, it is an even larger one for corporate travel – one that could cause a significant impact on the bottom line. Using GBTA member numbers, a typical large size program can purchase 26,000 domestic tickets annually. If you add up the $58.20 for the 26,000 tickets purchased in a year, the increase would cost the company over $1.5 million.
A small company that purchases 100 tickets annually and pays $29.20 for the 9/11 Security Fee and the PFC on a one-stop, round-trip ticket, would pay $2,920 in taxes. If Congress increases the PFC to $8, this company’s travel costs would increase to $4,320.00 solely because of these two taxes.
This drastic fee increase could backfire and end up damaging our economy. A 2015 GAO study found growth could be slower with a PFC cap increase if it results in a higher total cost of air travel and thus reduces passenger demand.
Why does this matter? GBTA research shows that for every 1 percent loss in business travel spending, the U.S. economy loses 74,000 jobs, $5.5 billion in GDP, $3.3 billion in wages and $1.3 billion in taxes. That’s a big risk to take – especially for money that airports may not even need!
Infrastructure and, in particular, airport infrastructure is vital to the business travel industry. However, the need for increased fees to pay for the infrastructure has been hotly contested. For this reason, GBTA is supportive of a study conducted with air travel experts to examine airport infrastructure.
This study, authorized in Section 122 of Public Law 115-254, the FAA Reauthorization Act of 2018 is intended to assess the current and future infrastructure needs of U.S. airports and to examine how those needs can be financed. The results of this study will be presented to Congress in January 2020. Congress should await the results of this committee before enacting yet another fee increase to the traveling public.
GBTA recognizes the need to address the state of this nation’s infrastructure. However, there is a mistaken sense that business travelers have infinitely deep pockets (they do not) and air travel is a luxury (it is not).
GBTA encourages Congress to reject any PFC increase and instead let the study be completed. An unwarranted increase to the PFC amounts to a tax on the cost of doing business in the United States, affecting our nation’s ability to be competitive, support jobs and drive economic growth. It is paramount that we have a full understanding of the issue before burdening the U.S. economy.