Robbing Peter to Pay Paul?

April 30, 2014

Ever hear someone say, “We’re robbing Peter to pay Paul?” When it comes to the 2015 Obama Administration budget the meaning behind this old saying becomes perfectly clear.

In a win for airports nationwide, the budget proposal calls for raising the cap on the Passenger Facility Charge (PFC) from $4.50 to $8, a move that will give airports more buying power when raising funds for capital improvement projects.

But this increase will come at a price. It comes in exchange for reducing entitlement grants. The proposed budget trims the overall level of federal grants to airports through the Airport Improvement Program (AIP) by $450 million. These funds typically go to smaller commercial and general aviation airports, and yes, there will be an impact if these funds are cut.

It is great news that the Obama Administration plans to support a PFC cap increase, but it also needs to continue its support of the AIP, a needed program that traditionally helps small- to mid-size airports enhance airport safety, capacity, security and environmental concerns. Smaller airports, which bring in less revenue and have less revenue-generating activities on site, rely on these funds to help meet FAA standards; replace or rehabilitate airport facilities including pavement and lighting systems; increase airfield capacity; enhance competition among airlines; and to modify, replace, and construct terminal buildings to accommodate additional passengers, larger aircraft and new security requirements.

As the federal government moves to rob Peter to pay Paul, it’s important that all airports—no matter what their size—begin looking under every rock and in every nook and cranny for potential revenue sources. There’s an estimated $70 billion in needed infrastructure improvements looming in the years ahead, and airports will need to pay for these projects somehow.

This issue Airport Business’ takes an in-depth look at what airports are doing to boost their non-aeronautical revenues. From FBOs to general aviation facilities to commercial airports, all are taking a creative approach to boosting revenue in uncertain times--an approach that will likely become a necessity rather than a luxury in the years to come. Take a look inside and learn how DFW continues to boost its commercial development revenue, while general aviation airports get creative with the use of their lands in the name of making money, and how one FBO focuses its efforts on a payoff in filmmaking.

Then take a hard look at your airport and your opportunities. Chances are there are more than a few money making opportunities in your neck of the woods too!

Thumbs Up:

2015 Budget Would Double PFC Cap

If passed, the Obama Administration’s Fiscal Year 2015 budget proposal will raise the cap on the Passenger Facility Charge (PFC) from $4.50 to $8. Airports collect this fee for every boarded passenger, but the PFC cap hasn’t been adjusted since 2000, creating a deficit in airport spending power. “With federal investment in our nation’s airport system declining and facing further constraints, airports desperately need additional tools locally to meet current requirements and to prepare for future demand,” says AAAE President and CEO Todd Hauptli. “Unfortunately local airport authorities remain hamstrung by a federal cap on local airport user fees that was last adjusted more than 14 years ago and that remains woefully inadequate to meet the very real and growing needs that exist at airports across the country.”