2017 was a challenging year for North American airports. As we look toward 2018, I am continually impressed by the resolve of our industry to confront issues and seize opportunities to the benefit of your passengers, customers, and communities. Through it all, ACI-NA continues to tirelessly advocate on behalf of airports to advance key priorities and mitigate uncertainty that can negatively impact airports’ ability to operate efficiently.
As always, airports continued to operate in an uncertain landscape filled with new requirements to alleviate concerns about evolving global aviation security threats. Maintaining the safety and security of the traveling public is a top priority for airports. Earlier this summer, the Trump Administration announced its intentions to ban portable electronic devices from the passenger cabin on flights from Africa and Europe in response to intelligence. Unilateral requirements pose significant challenges to the global airport industry.
ACI-NA worked in coordination with our colleagues at ACI World and ACI Europe to successfully advocate for enhance measures to be implemented at last point of departure airports rather than a full ban on electronic devices. Our work to identify risk-based mitigation measures that provide needed flexibility is a testament to the global reach our organization has with in the aviation industry. We will continue to collaborate with the Transportation Security Administration and global regulators to ensure security requirements can be tailored to the unique operating environment of individual airports around the globe.
As I continue to stress, modernizing airport infrastructure is a primary challenge for our airport members and one of our top legislative priorities. Throughout his campaign, President Trump spoke to the challenges that our national infrastructure – including airports – face. However, an infrastructure package has taken a backseat to policy items such as tax reform and healthcare.
In order to move the needle in Washington, we have redoubled our efforts on Capitol Hill and policymakers are beginning to come around to airport infrastructure needs despite age-old and inaccurate airline rhetoric. The Senate Appropriations Committee delivered two key wins for passengers and airports this year by modernizing the local Passenger Facility Charge (PFC) user fee and increasing funding for the Airport Improvement Program (AIP).
This is a very big “first step” in achieving airport priorities. Especially as the latest North American Annual Traffic Report shows that 65 million more people traveled through North American airports in 2016 than in 2015. And our current airport system was designed for half the traffic volume we have today! ACI World predicts that two billion passengers are expected to travel through North American airports by 2018 and three billion by 2035.
In the United States, airports have almost $100 billion in infrastructure projects during 2017-2021 to accommodate growth in passenger traffic, cargo activity and rehabilitate existing facilities. We cannot wait for an infrastructure plan. That’s nearly $20 billion a year. We must take any and every opportunity in 2018 to impress on the Trump administration and policy makers that airports need have significant infrastructure needs.
Just as it seemed that infrastructure investment was gaining some traction on Capitol Hill, airports and the entire municipal community were caught off-guard by the House of Representatives’ plan to eliminate tax-advantaged Private Activity Bonds (PABs), a vital financing tool for airports, as part of their tax reform package. This provision proves to be yet another challenge for airports as it would significantly increase the cost of airport infrastructure. Airports need stable funding to modernize facilities, meet the demands of communities and create jobs.
Thankfully, the Senate’s tax reform proposal preserves the tax exemption on PABs. ACI-NA continues to reiterate with both chambers the importance of PABs to airport infrastructure investment. After all, more than 60 percent of the bonds used to finance airport infrastructure projects are PABs. Airports could expect to incur higher financing costs – some $3.2 billion over the next five years – if this plan goes through.
In my last column, I spoke to the regulatory burdens airports face each day. In 2018, we will continue to work with the Trump administration and policymakers on regulatory relief measures that will enable airports to operate more efficiently in a business-like manner. With passenger traffic on the rise, we will be focusing our efforts on urging the Trump administration and the U.S. Customs and Border Protection (CBP) to develop new Airport Technical Design Standards (ATDS) and the Preclearance Facility Design Standards (PFDS) that enhance operations and reduce costs to help airports attract and retain international air service.
While we have faced challenges in 2017, we remain committed now more than ever to advancing airport priorities. The next year will prove to be an even more challenging year for advocacy as Washington gears up for midterm elections in 2018. As we continue our work, our success comes directly from our active and engaged airport members. Thank you for your continued participation in your association this year. Cheers to 2018!