We do think that the way the system is funded needs to be looked at closely. We did a Trust Fund analysis that showed that the amount of money in the fund is not going up; it’s steady or going down. We are concerned.
In Congress there’s a willingness to see the need to invest in airport infrastructure, with the AIP [Airport Improvement Program] number up in both Houses. That’s very gratifying.
The Administration and the House are both proposing an increase in the passenger facility charge; [they support] that it really is an efficient way to bring infrastructure online. It’s a pretty stable and predictable source of revenue; you can bond against it; financial markets like it.
I think it’s much more efficient and effective for the airlines, too. We represent air carrier airports; we certainly don’t want to do things that could choke off the recovery of the airline industry.
AB: On PFCs, it looks like some sort of increase may happen. Yet, we’re not going to see an easing of the restrictions of PFCs and FAA’s oversight. When you hear [FAA associate administrator] Kate Lang talk about it, you wonder why are we regulating all this so specifically? When she and Marion Blakey are going up to the Hill and saying this, why isn’t it ringing through to those people?
Principato: I agree with the disappointment that we haven’t gotten further with streamlining. Our view is that the PFC program is 17 years old, it’s a mature program.
I’m disappointed that there isn’t more recognition by the airline industry. I hope to work over the next three to four years — whenever the next reauthorization bill comes — to talk the PFC, that it really is a more effective, efficient way to bring projects online, instead of just going to the rate base.
AB: At a session at this year’s AAAE convention, the airlines seemed to feel that airports have been saving up their money and that there’s really a lot of infrastructure money sitting there in the system right now waiting to be spent. What’s your view on that?
Principato: I don’t think there’s any kind of mountain of cash on an industry-wide basis.
When PFCs are approved they’re project-based, so you can’t just charge a PFC for the heck of it. In many cases they’re pledged out for years; so [at the current $4.50 cap], they effectively have a PFC of zero for anything new.
Think about what you’re buying — you’re buying construction. It’s probably pretty hard to start a project with no money in the bank.
Some of my frustration is the accusation, if you can call it that, by the airline industry that the airports are doing well because they have good bond ratings. Well, they’re part of state and local governments; they’re required to run efficiently. The fact that you have a high bond rating and you are run efficiently helps keep costs down for the airlines, and for the passengers. I don’t really understand why they accuse airports of being too strong. A lot of airports have to make a lot of tough decisions. Security requirements have caused some airports to have to cut staff; airline service cutbacks in the bad times were difficult for a lot of airports.
Ask the Pittsburgh airport director [Kent George] about the challenges he faced when US Air pulled its hub out. It hasn’t been easy for anybody. The fact that airports have managed these changes overall in a responsible, constructive way doesn’t seem to me to be an indictment. It should be something that’s looked at favorably.
AB: What do you think of the pilot program being proposed for PFCs by the Senate, in which participating airports could set their own cap?
Principato: It’s not a substitute for increasing the PFC. If the final bill increases the PFC and there’s a program like that, then sure. I’m in favor of looking at anything that might make sense.
AB: How confident are you about the 30th of September [when current reauthorization expires]?
Principato: I don’t bet, but if I did I’d be looking more at December 31st.
ACI-NA praises house for providing airports with tools to fund capital improvements to meet increasing passenger traffic, encourage price and service competition, and improve safety and security.