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PFC Increase Sparks Debate in Committee

On Thursday, March 23rd, the Senate Commerce Subcommittee on Aviation Operations, Safety, and Security held a hearing titled “FAA Reauthorization: Perspectives on Improving Airport Infrastructure and Aviation Manufacturing.” The Subcommittee heard testimony from two different witness panels: Airport Improvement and Aviation Manufacturing.

The Airport Improvement panelist were Ms. Rhonda Hamm-Niebruegge, Executive Director of the St. Louis Lambert International Airport and Mr. Bob Montgomery, Vice President of Airport Affairs for Southwest Airlines. The focus of discussion was how to address our country’s airport infrastructure needs. Hamm-Niebruegge and Montgomery had very conflicting views regarding the merit of raising or eliminating the Passenger Facility Charge (PFC) cap of $4.50.

Hamm-Neibruegge explains that the PFC is a user fee and not a tax as some might suggest. She states that the “most logical way” to deal with our infrastructure requirements is to lift the cap. The Competitive Enterprise Institute, the Tax Foundation, and the center for Freedom and Prosperity have endorsed removing the cap as well.

Montgomery said customers are already over-taxed and that airports have many sources of revenues including Airport Improvement Program (AIP) grants. He says that increasing the fee burden will discourage people from flying and would disproportionately harm smaller communities because they “tend to connect through large airports and are forced to pay the PFC four times.”

Hamm-Neibruegge pointed out that airlines willingly charge additional fees for baggage, preferred seats, and itinerary changes. She stated that if the PFC cap were eliminated, airports would still be incentivized to keep the fees low to stay competitive. Hamm-Neibruegee told senators representing small airports that they “would stand to benefit since airports enacting a higher PFC would forego their annual enplanement formula funds thereby providing more funds for the FAA to distribute to smaller airports.”

Montgomery explained that airlines and airline passengers have no “seat at the table” when it comes to how PFC revenues are spent. “So long as federal eligibility requirements are met, airports can spend PFCs – monies collected from our customers – any way they want,” said Montgomery. He advocated for “a balance between financial prudency and capital wish lists” and said “such checks and balances lead to cost-effective capital planning.”

The Aviation Manufacturing panelists were Ms. Peggy Gilligan, Associate Administrator for Aviation Safety, Federal Aviation Administration; Dr. Gerald Dillingham, Director of Civil Aviation Issues, Government Accountability Office; and Mr. Greg Fedele, President, Sabreliner Aviation. The primary focus of this discussion was on the FAA certification processes for U.S. Aviation products.

Gilligan explains that “the expectations of industry, government and the flying public continue to increase, demanding we do things faster-and with greater levels of safety.” To meet these demands, FAA’s Aircraft Certification Service (AIR) is undergoing a transformation focused on three goals- refresh the certification strategy; invest in management systems to improve performance; and improve organization and invest in our people.

AIR recently created a new Organizational Performance Division that will oversee the roadmap to transformation, tracking outcomes expected by both FAA and industry. Regular updates can be obtained at www.faa.gov/go/AIRTransformation.

Dillingham provided a status report on FAA’s progress of implementing the recommendation issued by the aviation and rulemaking committees that were established in the 2012 FAA Reauthorization Modernization and Reform Act and FAA’s responses to the challenges that some U.S. companies reported facing when attempting to obtain foreign validations of their products.

The new GAO report stated, “FAA has completed all but one of the initiatives to improve its aircraft certification processes and has implemented a tool to help measure the outcomes of some initiatives.” These initiatives included developing a tracking system for certification initiatives, improving and expanding FAA’s organization designation authorization (ODA) program, improving the project sequencing process, improving the validation process, expediting the rulemaking process, and reorganizing the regulations for the certification of small airplanes.

Fedele provided insight on the certification process from a small business perspective stating, “We believe the development of the ODA scorecard and the Aircraft Certification Service (AIR) transformation initiative, if effectively implemented, will bring real benefits.” He also voiced support for the certification title passed by the Senate in 2016 as part of the Senate FAA Reauthorization bill.

We will continue to monitor this process and inform NASAO members of all major developments. If you have any questions, please don’t hesitate to contact John Shea at (703) 610-0272.

Categories: News
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