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88–353 PDF 2015

AIRPORT FINANCING AND DEVELOPMENT 

(113–75) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

AVIATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 18, 2014 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

DAVID W. JOLLY, Florida 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

SUBCOMMITTEE ON AVIATION

FRANK A. LOBIONDO, New Jersey, Chairman 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

SAM GRAVES, Missouri 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

ROGER WILLIAMS, Texas 

MARK MEADOWS, North Carolina 

RODNEY DAVIS, Illinois, Vice Chair 

BILL SHUSTER, Pennsylvania (Ex Officio) 

RICK LARSEN, Washington 

PETER A. DEFAZIO, Oregon 

EDDIE BERNICE JOHNSON, Texas 

MICHAEL E. CAPUANO, Massachusetts 

DANIEL LIPINSKI, Illinois 

STEVE COHEN, Tennessee 

ANDRE ́ CARSON, Indiana 

RICHARD M. NOLAN, Minnesota 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

CHERI BUSTOS, Illinois 

CORRINE BROWN, Florida 

ELIZABETH H. ESTY, Connecticut 

NICK J. RAHALL, II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... iv 

TESTIMONY 

PANEL 1 

Benito De Leon, Deputy Associate Administrator for Airports, U.S. Federal 

Aviation Administration ...................................................................................... 5 

Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure Issues, U.S. 

Government Accountability Office ...................................................................... 5 

PANEL 2 

Mark Baker, president and CEO, Aircraft Owners and Pilots Association ........ 26 

Todd Hauptli, president and CEO, American Association of Airport Executives ....................................................................................................................... 26

Sharon Pinkerton, senior vice president, legislative and regulatory policy, 

Airlines for America ............................................................................................. 26 

Mark Reis, chair, Airports Council International—North America, and managing director, Seattle-Tacoma International Airport ....................................... 26 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Benito De Leon ........................................................................................................ 49 

Gerald L. Dillingham, Ph.D. ................................................................................... 58 

Mark Baker .............................................................................................................. 85 

Todd Hauptli ............................................................................................................ 91 

Sharon Pinkerton ..................................................................................................... 101 

Mark Reis ................................................................................................................. 107 

SUBMISSION FOR THE RECORD 

Ed Bolen, president and CEO, National Business Aviation Association, written statement ....................................................................................................... 117 

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(1) 

AIRPORT FINANCING AND DEVELOPMENT 

WEDNESDAY, JUNE 18, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON AVIATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:04 a.m., in Room 

2167, Rayburn House Office Building, Hon. Frank A. LoBiondo 

(Chairman of the subcommittee) presiding. 

Mr. LOBIONDO. Good morning. The subcommittee will come to 

order. 

I would like to thank everyone for being here. 

Today we look forward to hearing from the Federal Aviation Administration, the Government Accountability Office, and industry 

stakeholders on the current and future state of airport financing 

and development. 

Airports serve as an important foundation—not just important, 

but critical, foundation of our Nation’s infrastructure. They enable 

millions of passengers to travel throughout the United States and 

to destinations all over the world. 

Airports are also a tremendous economic driver for many communities across the United States where airports and their air operators help connect large and small communities. 

Airports support over 10 million jobs with annual payrolls of over 

$360 billion. They produce annual output of $1.2 trillion to our 

economy. Airports play an important role to stimulate local economies. 

They connect our region to the Nation’s transportation grid, helping to bring additional visitors and tourism dollars to the region. 

Federal programs, including the FAA’s Airport Improvement Program, provide funding to help enhance airport capacity, security, 

efficiency and safety. 

Just 2 weeks ago Atlantic City International Airport, which, if 

you didn’t know, is in my district, was able to receive nearly $1.7 

million in AIP grants to help operations and dependability. 

This is just one of many examples in a long-established history 

of South Jersey airports and stakeholders working together with 

the FAA to continue the standard of excellence. 

Looking ahead, the FAA forecasts long-term aviation growth, including additional traffic, which may require the need for increasing system capacity. In fact, I don’t see how it can not have the 

need to increase system capacity. 

2 

This forecast calls for U.S. carrier passenger growth over the 

next 20 years to average 2.2 percent per year and more than 1 billion passengers being transported in the U.S. system. 

Just this past May we saw evidence to support the FAA’s forecast as the majority of U.S. air carriers expanded their flying capacities in order to accommodate the increased demand of air traffic. 

Given these projections, industry, FAA and Congress will need to 

work together and look to see what innovative approaches are out 

there to maintain our Nation’s airports’ ability to continue providing safe and efficient service. 

This type of innovation is already taking place at the FAA’s William J. Hughes Technical Center in my district. Research is being 

conducted in collaboration with industry and academia to ensure 

that the needs of our current and future air transportation systems 

are being met. 

The FAA Tech Center also operates the National Airport Test 

Facility on its campus. This is a state-of-the-art, full-scale pavement research facility which, among many other things, provides 

the FAA with engineered solutions for pavement designs that improve safety at airports. 

The subcommittee is very interested in hearing from the witnesses their perspectives on the funding mechanisms that exist to 

finance and develop airports and how Federal programs are being 

utilized, what could be improved, and what challenges lie ahead. 

We are also very interested in hearing how industry stakeholders 

from airports to air carriers have found creative ways to retain or 

increase their ability to provide air service. 

As we turn towards reauthorization in the next FAA bill, we 

hope to continue this dialogue on airport financing. It is important 

that we hear from all stakeholders and receive your input to learn 

what ideas work and do not work in the real world. 

I look forward to hearing from our witnesses today and thank 

them for joining us. 

Before I recognize Mr. Larsen for his comments, I ask unanimous 

consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material for the record 

of this hearing. Without objection, so ordered. 

Without objection, now I turn to Mr. Larsen for your opening remarks. 

Mr. LARSEN. Thank you, Chairman LoBiondo, for calling today’s 

hearing regarding airport financing and development. 

In 2013, the U.S. saw over 730 million passengers travel through 

its airports. And, by 2027, the FAA forecasts the number of annual 

domestic and international air passengers in the U.S. will reach 1 

billion passengers, a 24-percent increase in domestic enplanements 

and a 41-percent increase in international enplanements within 

that increase. 

Forecasts of increasing air travel may seem encouraging for the 

economy, but without adequate investment, passengers may experience more congestion and delays and our country may lose economic opportunities. 

In a recent study, the U.S. Travel Association found that 1 in 5 

of the Nation’s major airports currently experience ThanksgivingVerDate Aug 31 2005 14:17 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\AV\6-18-1~1\88353.TXT JEAN
3 

type levels of congestion at least once a week. Unless airports add 

capacity, 24 of the Nation’s top 30 airports will reach these levels 

of congestion within the next 5 years. 

There are real dollar figures associated with economic losses that 

will occur if our airports cannot accommodate this increased future 

travel. 

One study by the Eno Center for Transportation estimates that, in 2016 alone, the U.S. economy would lose out on over $6 billion 

in travel spending because of capacity constraints at just two airports and, by 2034, the center estimates this figure would reach 

$48 billion annually. 

So the bottom line is that we can’t have a big-league economy if 

we have Little League infrastructure. Our Nation’s airports are 

critical economic drivers and gateways that connect travelers all 

over the globe to the U.S. They also connect our communities to 

each other across the Nation. 

So we need to continue to invest in our infrastructure to remain 

economically competitive. At the same time, we need to make sure 

that we do not either overtax or overburden the aviation industry 

and passengers, as well as make sure that we don’t put unbearable 

debt demands on the airports themselves. 

Congress has long recognized a Federal role with respect to investing in aviation infrastructure. Two important ways the Federal 

Government supports the development of airports include the 

AIP—Airport Improvement Program—as well as passenger facility 

charges, or PFCs. The FAA estimates there are $42.5 billion in AIP-eligible airport 

capital projects needing investments over the next 5 years, about 

$81⁄2 billion annually. And a leading industry airport association 

estimates a capital need at about $71.3 billion over the next 5 

years, or about $14.3 billion annually, in other words, a lot of 

money. 

The FAA Modernization Reform Act of 2012 authorized annual 

AIP funds for $3.35 billion annually through 2015. However, even 

with airports’ ability to raise revenue through PFCs, there is a significant gap between the available funding and the investment 

needed for these critical safety and capacity projects. 

So as we prepare to authorize the FAA next year, this hearing 

is an opportunity for us to explore these issues facing our airports. 

This includes examining the current needs of airports, how the 

industry is financing capital development with its limited resources, and the Federal Government’s role to ensure adequate investment. This is no small task. 

There are more than 19,000 airports in the U.S., and nearly 

3,400 of those airports are designated by the FAA as part of the 

National Plan of Integrated Airport Systems, making them eligible 

for Federal funds. They range from large hubs with commercial 

service to small GA airports. 

We have one of the greatest aviation systems in the world. 

Whether large or small, airports across the country have a documented economic impact on their communities as well as the ability to connect people, goods and services. 

In my home State of Washington, constituents rely on airports 

of all sizes. In my hometown of Arlington, general aviation at the 

4 

Arlington Municipal Airport is hugely important and the annual 

fly-in there brings in people from all across the country. 

Bellingham International Airport in northwest Washington is developing as a commercial airport and has seen double-digit growth 

in recent years, requiring further investments in terminal and operation infrastructure. 

And my constituents rely on Seattle-Tacoma International Airport, one of the major hubs in our country’s aviation system. And 

I am pleased that Mark Reis from Sea-Tac is with us today. 

Each of these airports plays a different, yet important, role in 

serving the local community and the national aviation network. As 

this committee considers airport funding, we need to encourage investment in airports, large and small. 

Mr. Chairman, as we recently discussed at our hearing regarding 

small community air service, maintaining a national air transportation system will require a sustained Federal commitment. 

I look forward to hearing from our witnesses today about the status of our airport infrastructure and ideas for continued investment 

now and in the future. 

And, finally, Mr. Chairman, I want to take a moment before I 

finish to recognize a key staff member of this subcommittee who 

will soon be leaving us. This will be the last hearing that we will 

have the wise counsel of Giles Giovinazzi. 

Giles has been a great resource for myself and for my staff, and 

we will be losing a great deal of institutional knowledge as well. 

I want to thank Giles for his many years of admirable service to 

this committee and wish him and his family well as they move on 

to new opportunities, thankfully, on the west coast. Thanks, Giles. 

[Applause.] 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. We thank Mr. Larsen. And we, too, would like to 

thank Giles for his years of service and his strong approach to solving problems. We wish all the best in California for you and your 

family. 

I would now like to recognize the chairman of the full committee, 

Chairman Shuster, for opening remarks. 

Mr. SHUSTER. Thank you very much, Chairman LoBiondo. 

And let me start off by thanking Giles for all of his hard work. 

And although he works on the other side of the aisle, he has been 

somebody that I have talked to and learned from over the years. 

He really is an expert on the subject. California DOT is going to 

benefit by his wisdom and his hard work. 

So we wish you well. 

I had a discussion with him the other day. It sounds like we are 

going to see him back here in Washington occasionally—or more 

than occasionally. 

Our door is always open to you, Giles, and best wishes to you as 

you move on. 

Again, I want to thank Chairman LoBiondo for holding this hearing today to discuss the current and future funding and the status 

of airport financing and their development. 

I think everybody in the room knows the importance that airports play in our aviation system and our airline system. Not only 

5 

are they the gateways to our skies, but they provide a critical role 

in emergency and disaster responses. 

And there also are economic drivers in the communities that they 

are in. That is something we need to again make sure we pay close 

attention to. 

As the chairman and the ranking member have so ably talked 

about the future and the forecast, we are going to see more passengers. We are going to see more cargo moving through these airports. 

And in this current budget situation, we are all finding out how 

to do more with less. However, we need to ensure that we are making the investments in the airports and maintaining the current 

system to accommodate that future growth. 

I think everybody is aware that the FAA authorization expires 

September of 2015. We have already begun to lay the groundwork 

at hearings like this and others that the ranking member and the 

chairman have held, making sure that we fully understand the situation. 

Chairman LoBiondo, myself, and Congressman Graves have held 

already a number of listening sessions with stakeholders to find 

out where they are, what their thoughts are and ways we can improve. 

I think we have an opportunity that doesn’t come along often 

that we are going to be able to do something significant to improve 

the FAA, to reform the FAA, to change the way they do business, 

so that we can all benefit by efficiencies that NextGen gives us. 

I look at the wall up there with all those chairmen and I think 

every single one of them talked about NextGen at one point when 

they were chairmen. 

That goes back over 20 years ago, maybe even 30 years, we have 

been talking about it, and the time has come that we need to try 

to figure something out to get this done. 

We are very interested in hearing all the stakeholders, getting 

their views, and I see a couple out there that have already had listening sessions with us. And we invite you to share your thoughts 

and concerns as we move forward to the next FAA reauthorization. 

So, again, thank you, Mr. Chairman, for holding this hearing. I 

yield back. 

Mr. LOBIONDO. Thank you, Chairman Shuster. 

We now will welcome our witnesses. On the first panel, we have 

Mr. Ben De Leon, Deputy Associate Administrator for Airports at 

the Federal Aviation Administration; and a very frequent and welcome witness, Dr. Gerald Dillingham, Director of Physical Infrastructure Issues for the U.S. Government Accountability Office. 

Mr. De Leon, you are recognized for your statement. 

TESTIMONY OF BENITO DE LEON, DEPUTY ASSOCIATE ADMINISTRATOR FOR AIRPORTS, U.S. FEDERAL AVIATION ADMINISTRATION; AND GERALD L. DILLINGHAM, PH.D., DIRECTOR, 

PHYSICAL INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. DE LEON. Chairman LoBiondo, Chairman Shuster, Ranking 

Member Larsen, members of the subcommittee, thank you for the 

6 

opportunity to discuss the Federal Aviation Administration’s role in 

developing our Nation’s airport infrastructure. 

The FAA is committed to a safe and efficient national system of 

airports. Our national airport planning efforts in the administration of the Airport Improvement Program, commonly referred to as 

the AIP program, are targeted toward addressing the system’s most 

pressing needs. 

AIP investments will facilitate improvements in the core areas of 

safety, capacity, delay reduction, security and environmental sustainability. The AIP program supports a national system of airports that includes airports of all sizes located across the country. 

This system is the backbone of the aviation system that is important to the success of the U.S. economy. Because demand for the 

AIP grant funds consistently exceeds availability, effective focusing 

these investments is critical to maintaining an adequate national 

system of airports. 

To achieve that success in our airport planning investments, we 

collaborate with the full range of stakeholders; we carefully consider reports and recommendations from GAO and other organizations; and, we consistently review system performance to measure 

success and identify areas for improvement. 

An area that we have identified to be in need of improvement is 

the ability to focus AIP resources on smaller commercial and general aviation airports. AIP grants are just one of several sources 

that airports use to fund capital investment. Other sources include 

passenger facility charges, commonly referred to as PFCs, bonds, 

and airport revenues. The availability of funding sources varies 

with the type of airport and level of activity. 

For larger commercial service airports with a significant number 

of passengers, PFC revenues are a more flexible capital funding 

source. Airports with strong passenger volumes can generally issue 

bonds backed by future PFC revenues. 

As a result, larger airports are generally less reliant on AIP 

grants, while smaller airports may be much more heavily reliant 

on AIP funding. Yet, many of those small airports are also very important to the overall system either for access or to relieve pressure 

on larger commercial service airports. Without them, the larger 

commercial service airports will need to accommodate more aircraft, which can reduce capacity and increase delays. The users of 

large airports depend on some of these smaller airports for overall 

system capacity and efficiency. Focusing AIP resources on smaller 

commercial and general aviation airports is a prudent and necessary investment to help the entire system. 

The FAA reviews all requests for AIP funding with a careful 

focus on aeronautical need. The FAA’s top priority is safety, and we 

have made runway safety a focus. AIP grants are funding runway 

safety area improvements, or RSAs, that provide an extra margin 

of safety on a runway should an aircraft overrun, undershoot, or 

stray from the runway. 

Maintaining facilities, including runways, taxiways, and equipment, in a state of good repair is critical to the safety of the airport 

system. We are constantly working with airport operators to preserve existing infrastructure. 

7 

In the last 15 years, 16 new AIP-supported runways were completed at many of the busiest commercial service airports in the 

United States. 

These projects and others decreased average delay per operation 

at these airports by about 5 minutes. This might sound minor, but 

because the delays propagate throughout the system, that degree 

of improvement is significant. 

In closing, investment in our national airport infrastructure is 

crucial in maintaining the safest, most efficient air transportation 

system in the world. The AIP program is a vital capital funding 

source that works effectively with other funding sources to support 

the Nation’s airport infrastructure. 

Thank you again for providing me with the opportunity to be 

here today, and I will be happy to answer any questions at this 

time. 

Mr. LOBIONDO. We thank you very much. 

Now we will turn to Dr. Dillingham. I will now recognize you for 

your statement. 

Dr. DILLINGHAM. Thank you, Mr. Chairman, Chairman Shuster, 

Ranking Member Larsen, members of the subcommittee. 

Since 2007, there has been a significant change in the aviation 

industry. At many airports, aviation activity has declined and has 

become concentrated at larger airports. 

Given the potential effect of these changes on airport infrastructure demands and finances, my statement this morning focuses on 

two key questions surrounding airport development: First, what 

are the estimated future costs of airports planned development? 

Second, what are the types and amounts of funding available to finance that development? 

Regarding the future cost of airport development, the latest estimates from FAA and the Airports Council International—North 

America, or ACI–NA, both show a decline in the cost of airport 

planned development. 

This decline is attributable to several factors, including airports 

choosing to defer projects due to reductions in aviation activities, 

which can be linked to the recent recession, airline consolidation, 

and higher fuel costs. 

FAA’s most recent estimate of airport development costs for projects which are eligible for Federal funding is $8.5 billion annually. This estimate was approximately $2 billion per year or 18 percent less than FAA’s previous estimate for the 2011 through 2015 

timeframe. 

In addition, ACI–NA estimated another $4.6 billion for planned 

development that are not eligible for Federal funding. Therefore, in 

combining the latest available FAA and ACI–NA estimates, the 

total estimated annual cost of planned development is about $13.1 

billion. 

We plan to report on the updated estimates when they become 

available this fall for this committee. 

Turning to our second question regarding the types and amounts 

of funds available to support airport development, overall, federally 

authorized support for airports, specifically AIP funding and PFCs, 

has declined in recent years while nonaviation or landside revenue 

sources have grown. 

8 

Specifically, annual appropriations for AIP decreased from about 

$3.5 billion for fiscal year 2011 to about $3.35 billion in fiscal years 

2012 through 2014. 

In addition, while the current House and Senate appropriations 

bill keeps the amount of AIP funding at or above current levels, the 

President’s 2015 budget calls for a reduction in AIP appropriations 

to $2.9 billion. 

With regard to PFCs, since PFCs were first approved in 1990, 

they have expanded to include 388 airports. However, collections 

are very concentrated, with almost 90 percent of all PFCs going to 

large and medium hubs. 

Total PFC collections also declined along with passenger traffic 

during the last recession, but since have rebounded to $2.8 billion 

in 2013. The Federal cap of $4.50 for PFC has not increased since 

2000. 

As a result, many airports’ future PFC collections are already 

committed to pay off debts for past development projects, leaving 

little room for funding new development. The President’s 2015 

budget has called for increasing the PFC cap to $8 while eliminating AIP for larger airports. 

In response to declining Federal support for airport development, 

airports have sought to increase their nonaviation revenues. By focusing on other business activities to generate revenues, some airports have become involved in an increasing range of unique developments on airport properties. 

For example, some airport operators generate revenues through 

temporary leases of airport property for uses as diverse as solar 

farms, oil extraction, cattle grazing and golf courses. 

In addition, public-private partnerships involving airports and 

developers are being used to finance airport development projects, 

such as the planned terminal construction at LaGuardia Airport in 

New York. 

However, these options are not available to all airports. Many 

airports, especially those located in smaller communities, could not 

survive without Federal support. These airports provide a vital link 

to the Nation’s aviation system for those communities. 

Mr. Chairman, as the committee begins its deliberations for the 

2015 FAA reauthorization and the appropriate Federal support for 

airport developments, it will have some critical questions and information needs. 

These include whether declining Federal support could negatively effect the national system of airports and the communities 

they serve, whether greater private investment could be encouraged at airports, and if an increase in the PFC cap is warranted. 

We are currently assessing these issues for this committee and 

expect to report our findings out later this year. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Doctor, we thank you very much. 

We will now go to some questions. 

For you, Mr. De Leon, with the talk about the AIP grants, and 

last year the FAA issued about $3.2 billion, can you walk us 

through the collaborative process to approve or deny an AIP grant 

application to get the money to the airports. How does that work? 

9 

Mr. DE LEON. Yes, sir. We like to pride ourselves in being collaborative with our airport sponsors. We work really closely with 

them. 

We start in the neighborhood of 3 to 4 years in advance of 

issuing a grant during the planning stage. We work with airport 

sponsors to identify their critical needs today and in the future 

and, hopefully, lay the groundwork for future grants. 

So, we start early and work with the sponsor in a transparent 

process. We follow the sponsor through the environmental process 

for that particular project. When we get to the actual construction, 

designing and building the project, we work closely with the sponsor to identify a funding plan that works for the FAA and the sponsor and that also meets their timeline. 

Generally speaking, we collaborate with sponsors early on a lot 

of projects so that we don’t end up denying projects. We work closely with them. It is a matter of timing on when we issue the grants 

to them, and we try to keep that collaboration open. 

Mr. LOBIONDO. And you respond to AIP grant applications. Correct? 

Mr. DE LEON. That is correct. 

Mr. LOBIONDO. So you don’t initiate the project? You review the 

projects that are presented for the grants by the airports? 

Mr. DE LEON. Well, we don’t initiate the actual grant application 

process. But before an application is received, we have already 

been working with them on identifying the projects that they need 

to meet their critical needs. So, we have already had a number of 

discussions before the application comes in. 

Mr. LOBIONDO. But that is when the airport comes to you and 

starts talking about what the needs may be and you start working 

through with the preliminary discussions? 

Mr. DE LEON. Yes, sir. Correct. 

Mr. LOBIONDO. Last year, also for you, Mr. De Leon, airports 

spent roughly $2.8 billion on PFC projects and the FAA issued, 

again, $3.2 billion in AIP grants. 

Can you please help us understand the fundamental difference 

between AIP and passenger facility charge dollars and what they 

can be used for. 

Mr. DE LEON. Well, generally, PFC dollars follow the same eligibility as AIP project-wise, except PFC has—— 

Mr. LOBIONDO. Can you pull your mic closer to you. 

Mr. DE LEON. I’m sorry. 

Except PFC can be used for gates and boarding areas. So there 

are a lot of similarities. But, what we are seeing is that a lot of 

the larger airports that implement PFCs usually use PFCs on 

landside-type projects and then AIP funding is used on the airside 

projects. It is sort of a balance between the two. 

Mr. LOBIONDO. Dr. Dillingham, could you tell us, in your view, 

what would be the impact on AIP entitlement and discretionary 

funding if the President’s budget request of $2.9 billion for AIP 

were enacted. 

Dr. DILLINGHAM. Yes, sir. According to the existing statutes, if the AIP appropriations is less than $3.2 billion, it significantly reduces the entitlement funds that are available; and, therefore, it 

would have a more devastating effect on small airports, since they 

10 

rely more heavily on AIP than do the larger airports. It is about 

formulas, sir. 

Mr. LOBIONDO. OK. And we understand that the GAO is currently conducting a study that will include an analysis of potential 

impact of raising the passenger facility charge. 

Can you tell us what issues are included in that study, when the 

study will be completed. And how do you think the findings of that 

study will be helpful to the committee? 

Dr. DILLINGHAM. Yes, sir. We do have a study of PFCs underway 

for this committee. We are intending to look at various scenarios 

of the impact of raising the PFC. All airports may not decide to impose the full PFC that the Congress will grant. 

I think probably one of the most important concerns is the impact on traffic. We have in the past looked at the impact of imposing the $3 security fee a couple of years ago. 

And what we found was that there was a loss of passenger traffic—about 1 percent loss of passenger traffic. Over a 3-year period, 

that was about 26 million passengers. 

As you know, Mr. Chairman, there is a certain amount of price 

elasticity for anything that we buy. I mean, if it gets to a certain 

price, then we will choose not to purchase it. 

Now, clearly, this may not impact certain kinds of passengers 

like business travelers who need to go, but it may impact the recreational traveler where you get just to that edge and they can’t 

pay another $35 or $36 or $100. 

So we are trying to develop those scenarios so that we can provide them to this committee as they make their deliberations for 

the 2015 reauthorization. 

Mr. LOBIONDO. Thank you very much. 

Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Mr. De Leon, the President’s request proposes to decrease AIP 

grants by about $450 million. It also proposes to increase the PFC 

cap. 

Do you have an estimate of how much additional funding for infrastructure projects that would generate, the net that it would 

generate? 

Mr. DE LEON. With an increase of $8, we estimate that it would 

add roughly about $2.5 billion extra above what the primary airports could use for airport development. 

Mr. LARSEN. If the cap was increased to $8 and airports took advantage of that and large airports as well gave up AIP grants as 

proposed, would the FAA have any role in ensuring that airports 

would first invest in safety capacity, enhancing competition, as opposed to investing in revenue-producing projects? 

Mr. DE LEON. Our thinking is that, even if the large airports 

move out of the program and return some of their entitlement dollars, that they will still have access to some discretionary dollars, 

particularly if we have some national safety initiatives that we 

want to impress on the system itself. For instance, the Runway 

Safety Initiative is underway right now. It is important to implement that across the country. 

11 

So, in cases where we have a special initiative, a safety initiative 

in particular, we would probably allow them access to some discretionary funds. 

Mr. LARSEN. I hope the airports can address that a little bit as 

well when they are up here. 

Since 2005, there have been three mergers involving six major 

legacy carriers in the U.S. Has FAA itself done any—or have any 

view of how industry consolidation has affected capital needs of airports throughout the system? 

Mr. DE LEON. We have not done a formal analysis. We have seen 

consolidation come about. There are a lot of dynamics in the aviation system right now with consolidation, up-gauging, down-gauging. We are not sure how the actual dust is going to settle on some 

of the hubs, whether they will continue to operate or not. So, it is 

more or less kind of wait and see. We are looking at things internally, but nothing formal until things shake out on the airline side. 

Mr. LARSEN. Yeah. 

Dr. Dillingham, can you answer that question? Have you looked 

at that question? 

Dr. DILLINGHAM. Yes, sir. We haven’t focused specifically on that. 

But as part of our general monitoring of what goes on in the aviation industry, there are a couple of things that seem obvious to us. 

One is that some of the—well, I agree with Mr. De Leon that you 

can’t totally separate out the effect of consolidation, but you can 

look at certain elements of consolidation, like the decision to dehub 

an airport as part of consolidation. 

You would see less activity at that airport. Activity is what takes 

a toll on infrastructure. You will also see, when there are things 

like dehubbing or consolidation, where certain airports are no 

longer as active as they used to be. 

You will see a case where, again, airports will either decide not 

to invest in infrastructure or delay that infrastructure, again, related to aviation activity. 

Mr. LARSEN. OK. Also, Dr. Dillingham, has GAO concluded that, 

at current AIP funding levels, if they continue as they are, would 

they be sufficient to meet planned capital development costs for the 

next 5 years? 

Dr. DILLINGHAM. Mr. Larsen, I think it was said earlier that 

there is a continuous gap between planned development and available funds, and we don’t expect that that will change. 

We will know better when both FAA and ACI–NA come out with 

their new estimates and we are able to complete that work that we 

are also doing for this committee for the 2015 reauthorization. 

But, you know, the bottom line is there is likely to be a gap. And 

we are careful to say planned development as opposed to needed 

development, because there is a difference there. 

Mr. LARSEN. I like to say demand is infinite. Need you can define. 

Finally, Dr. Dillingham, this question of PFC and the cap versus 

AIP versus the general capacity of airports to finance development, 

has GAO at all looked at the ability of airports to finance capital 

improvements through debt? 

And, if you have, have you looked at the difference between, say, 

a public airport like a Sea-Tac, which is a Port Authority airport, 

12 

versus a privately run airport? Have you looked at that kind of 

issue at all? 

Dr. DILLINGHAM. Generally, what we found is that airports, especially large airports, are very stable and easily obtain capital funding from the private sector in terms of bonding. But that is where 

about, I think, 50 percent of airport funding derives from. 

A much smaller proportion of public funding through bonds is 

available to small airports. We see it as about 15 percent for small 

airports. 

And part of the work that we are doing now is looking at the status and financial status of airports—we are hearing from the bond 

rating agencies on Wall Street that airports have excellent bond 

ratings. 

So that should continue into the future, especially as passenger 

traffic increases, as was mentioned earlier. 

Mr. LARSEN. Thank you. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Mr. Shuster. 

Mr. SHUSTER. Thank you, Mr. Chairman. 

Mr. De Leon, I think you said it was $3.35 billion in AIP funds. 

Is that the number total? 

Mr. DE LEON. Yes. 

Mr. SHUSTER. What’s the breakdown between the entitlement— 

what’s been on the entitlement and what’s been discretionary? 

What is the formula? And what—— 

Mr. DE LEON. Generally, the breakdown is, of the $3.3 billion, 

about two-thirds of it is classified as entitlement dollars. About 

one-third is discretionary. 

Mr. SHUSTER. And looking at the challenges that the FAA faces 

in administering those AIP funds—and I have traveled around the 

country and I have talked to the airlines, I have talked to the airport. And sometimes they are not always on the same page as to 

what investments should be made in the airport. 

When you are giving these grants out, do the airlines weigh in 

on what you give to an airport? Do they deem that they are the 

customer? 

Or even the GA community that uses some of these airports significantly, they may have differences of opinion. Do they have a 

voice in the discretionary? 

Mr. DE LEON. I would like to say yes, but it is not always the 

case. We like to have the airports coordinate the projects with the 

tenants and the community because we find that if they do that 

and they collaborate, the projects are easier to administer. But, 

that collaboration doesn’t happen consistently across the country. 

Mr. SHUSTER. And what are the biggest challenges you face on 

AIP grants? 

Mr. DE LEON. I think one of the biggest challenges we have is 

that there are some safety initiatives that we really want to undertake, and they are good size safety initiatives. 

We want to be able to use the discretionary funds towards safety, 

because safety is number one for the FAA. We have a lot of things 

going on in the safety umbrella. 

We have taken care of the capacity. So the capacity is pretty 

good for right now, but it is not going to stay that way forever. 

13 

Mr. SHUSTER. Mr. Dillingham, it is good to see you back here 

again. You are a regular visitor. We appreciate it. 

Dr. DILLINGHAM. Thank you, Mr. Chairman. 

Mr. SHUSTER. You talked about the security fee increase and the 

price elasticity of it and 26 million less customers. And we see that, 

in the airline industry now, the demand appears to be up on seats. 

Their prices are inching up, which we understand that’s the way 

it works, supply and demand. 

As we see that increase—and I know there is talk—the President 

proposed, I think, $8. The airports have proposed $8.50, a 3.50, $4 

increase. 

Have you done an analysis on improving climate in the airline 

industry and prices going up there, as well as putting higher fees 

on—do you have any analysis on what kind of downturn that is 

going to have on passengers? 

Dr. DILLINGHAM. Mr. Chairman, those questions that you ask are 

part of our current work that we are doing for you and the subcommittee. We expect that we will be able to report that out to you 

by the end of the year. 

Mr. SHUSTER. Well, I thank you for that and look forward to seeing that. 

And I know we have got to figure out how—airports need money. 

Everybody in the country has clamored for more money when it 

comes to especially infrastructure and transportation. 

If you increase PFCs, what kind of benefit do you see for the airports? And, again, the proposal is they raise the PFCs and they 

eliminate AIP funds. Is that correct? 

Dr. DILLINGHAM. Yes, sir. 

Mr. SHUSTER. And what kind of benefit do you project? Is that 

something you are looking at, also? 

Dr. DILLINGHAM. Yes. It is already established that, if the airports get a raise in PFCs, it would allow them to undertake more 

infrastructure projects. 

And, also, the other side of it is that, if they impose that full 

PFC, then moneys are turned back to the FAA and that money becomes part of discretionary and, also, available to smaller airports. 

So it is sort of a two-way street that goes there, keeping in mind 

that, again, on those margins, the passenger traffic could be affected. 

And if the passenger traffic is affected, less tickets are sold, less 

money goes into the trust fund. So it is sort of a complex sort of 

merry-go-round that happens there. 

Mr. SHUSTER. And, of course, one of my big concerns, coming 

from a rural area, is small airports and even medium-size airports. 

The Pittsburgh airport, for example, had a significant reduction 

in flights to it. They fortunately, though, are one of those airports 

that they found natural gas on the airport. 

So they have finally—instead of trying to fight the FAA wanting 

to spend the money in downtown Pittsburgh, they finally realized 

that the money has to stay on site, which I am very happy that 

has happened in Pittsburgh. 

You mentioned other airports, golf courses and various other developmental projects to help them gain revenue. Do you consider 

that into the formula in the discretionary and the grants you give 

14 

in the AIP funds, is that factored in anywhere or is that not considered? 

Mr. DE LEON. I would like to say that it is probably considered 

at some point in time. But, when we issue the grants, we are talking about their matching funds, the ability for them to put the 

money upfront. 

A lot of times, it is not a question if they can’t meet the matching 

funds. Rather, it is more of whether the project is eligible and 

ready to go and move forward. 

So we don’t really get too deep in the nonaeronautical side. 

Mr. SHUSTER. So I guess my real question is: They are not penalized? 

Mr. DE LEON. No. 

Mr. SHUSTER. The Pittsburgh airport is not going to be penalized 

for the great fortune they had by finding natural gas? 

Mr. DE LEON. No, sir. 

Mr. SHUSTER. OK. I thank you. 

And I yield back. 

Mr. LOBIONDO. Thank you. 

Mr. DeFazio. 

Mr. DEFAZIO. Thank you, Mr. Chairman. 

Dr. Dillingham, I know your current report is specifically on airport funding, but I want to delve back a little bit into some past 

work you have done. 

I was the Democratic author many years ago of PFCs—because 

I saw inequities where, for instance, people from Vancouver are 

using the Portland airport and don’t even pay taxes in the State 

of Oregon—I thought it was an inequitable way to deal with these 

issues. 

The initial concern was abuses, off-airport uses and other abuses 

of PFCs. And I think, in the past, you have actually looked at those 

issues, what the authorized uses are and whether there has been 

any deviation from those. 

Can you update us on that? Are PFCs being used well within the 

existing authority in the law and usefully? 

Dr. DILLINGHAM. Mr. DeFazio, to our knowledge, PFCs are, in 

fact, being used for their intended purposes and, in fact, are achieving what the objectives of the legislation were. 

FAA is pretty tough on revenue diversion and it is one of their 

priorities to ensure that those kinds of things don’t happen or are 

minimized. 

Mr. DEFAZIO. And we have documented the need for the current 

state of our aviation infrastructure—I mean, it is not as bad as surface, but we certainly have unmet needs. And you have gone 

through those numbers. 

What are the—I just can’t think. We have AIP, and currently we 

are spending less than the annual income to AIP; are we not? I 

mean, we see a growing balance in the trust fund? 

Dr. DILLINGHAM. Yes. We do see a growing balance in the trust 

fund. In fact, the balance in the trust fund now—I think FAA is 

projecting in 2013 or 2014 that the uncommitted balance will be $4 

billion plus. 

15 

Mr. DEFAZIO. And is that because they need an operating 

cashflow reserve for commitments that are made or does that balance far exceed those needs? 

Dr. DILLINGHAM. I am probably not in the best position to answer that. Maybe Mr. De Leon can answer. 

Mr. DEFAZIO. Mr. De Leon, can you answer that question? 

Mr. DE LEON. I checked with the budget office this morning. We 

asked the same question about the trust fund balance. What we 

were told is that there is a current balance of roughly $13 billion 

in the trust fund and there is roughly between $4 billion and $5 

billion that is uncommitted in the trust fund right now. 

Mr. DEFAZIO. And is—you know, with highways we have a number. You can’t drop below that number and meet obligations on an 

ongoing basis because have you a cashflow issue. 

Do you know what that number is? It wouldn’t be $4 billion. It 

would probably be substantially lower than that? 

Mr. DE LEON. I do not know, sir. I will take an IOU on that. 

Mr. DEFAZIO. OK. That would be a useful thing to know. 

So we’ve got AIP. We’ve got PFCs. We’ve got rents. We’ve got the 

entrepreneurial activities. And now we have some privatization. 

I can only see one of—I guess two of those potentially—I don’t 

know. Private investors need a return. So I am not sure that that 

will go there. Entrepreneurial is, I guess, the only one. 

But rents, PFCs and/or the financing of AIPs, should we raise 

the tax—all of those will be reflected in ticket prices, ultimately. 

Correct? 

Dr. DILLINGHAM. Yes, sir. 

Mr. DEFAZIO. So I guess, then—for those who don’t want to raise 

PFCs, I guess they would say the only place airports can go would 

be entrepreneurial activities that wouldn’t bring back a burden? 

Because the privatization that—you have got to have even more 

return there because they need a return on their investment. So 

that maybe even puts a higher burden on potential charges towards passengers. 

Dr. DILLINGHAM. Yes, sir. Nonaeronautical revenues are going to 

be the least burdensome to the taxpayer. 

Mr. DEFAZIO. Right. 

But how limited are those? I mean, I assume not all airports 

have that option. And even the airports that do have that option, 

how much of the unmet need do you think that can cover? 

Dr. DILLINGHAM. You are correct that all airports don’t have that 

option. 

The last numbers we have—I think 2012, 45 percent of airport 

revenues were attributable to nonaeronautical revenues including 

the biggies of parking and ground transport. 

That is still going to leave a gap compared to termed planned development needs. 

Mr. DEFAZIO. And if you would, say, substantially raise the car 

rental fees or you substantially raise the parking fees, that also has 

some sort of a detrimental impact on consumers planning a flight 

because they look at what the whole thing is going to cost them? 

Dr. DILLINGHAM. Yes, sir. 

Mr. DEFAZIO. OK. So there is no easy way out of this? 

Dr. DILLINGHAM. Exactly. 

16 

Mr. DEFAZIO. OK. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Mr. Meehan. 

Mr. MEEHAN. Thank you, Mr. Chairman. 

And I thank the experts here for their testimony on this issue. 

One point I am just trying to understand is when you are doing 

your projections—and these are important because they look at the 

long-term implications. 

So I listened to Dr. Dillingham’s testimony today about the impact that the economy is having on travel and, therefore, reduction 

in utilization. Maybe it is smaller airports. I really am not completely clear. 

But then I look at the FAA’s projection, and you are saying that 

airport is going to grow at 2.2 percent. Travel is growing at 2.2 percent a year. 

How do you reconcile the differences in that? And where, really, 

is airport travel going to be over the course of the next 5 years? 

Mr. De Leon, do you know? 

Mr. DE LEON. From the AIP program perspective, yes, we have 

the forecasts out there that we use as one factor for evaluating how 

we fund projects. But, we also actually work with a sponsor and 

we actually look at who is using the airport today, and what type 

of aircraft are using the airport today. 

A lot of airport sponsors have commitments from other people 

that: If you had a certain runway length or a taxiway, for example, 

we would come in and do business at your airport. That is factored 

into the analysis to determine AIP funding, more so than longrange forecasts. 

Mr. MEEHAN. One of the issues—and I am more interested in 

pursuing this further, but have a limited time. 

The issue that is of significant importance to me, representing an 

area in the Northeast in which there is a fair amount of congestion, 

what role does congestion play in the impact on costs associated 

with airports? 

I am trying to find the right balance in which we are looking at 

improvements in things like NextGen. And there is concerns about 

where we are in form of the implementation of NextGen. 

But, you know, do we have technologies that are going to impact 

the need for airport expansion or how do we measure appropriately 

what the right amount of airport expansion is to deal with congestion? 

Mr. DE LEON. From an FAA standpoint, when we look at capacity, delays at airports, or a metropolitan area where you look at 

airport development on the ground, in order to maximize the development of, for example, a new runway, or a major runway extension, coupling that with NextGen technology would make the return on that investment even better. 

What we are working on as we go forward, is trying to incorporate NextGen technology into our development. 

Mr. MEEHAN. So even though you may be expanding the—or improving the efficiency and, therefore, the on-time arrival and, 

therefore, reduction in costs, there is still a critical role to be 

played by expanding the amount of asphalt, so to speak, to create 

more landing base? 

17 

Mr. DE LEON. I would say that right now, as we look at the capacity across the Nation, we are probably fine for the first decade, 

but there are some places that we understand are chronically delayed. I am not sure what the answer is in those locations. 

You can probably guess where they are. The New York area is 

a very difficult place to figure out what to do on that. 

Mr. MEEHAN. How do we figure that out? Because it is critical. 

I mean, these are things that I am struggling with because I am 

trying to find out the right balance to be able to ascribe who is responsible for what. 

We want to promote on-time delivery because there is a point in 

which—the testimony here today is lost opportunity. I mean, we 

have people who do not get a chance to take trips because of congestion and other kinds of things. This is the testimony I am reading. 

How do you find out where the right balance is between, you 

know, investment—well, the right balance that will help us deal 

with the congestion? 

Mr. DE LEON. Well, I like to say that it starts, at least from the 

FAA standpoint, during the planning process. Working really closely with the airport sponsor to get the information upfront, and 

working with all of the stakeholders to finding out what the issues 

are, and trying to address the issues, are the best places to start. 

This is part of the planning process. 

As you go into the environmental process, it gets a little tighter 

because you must address the purpose and need and balance, and 

the environmental impacts. But, if you do your proper planning upfront, and get all the information upfront, that really helps the 

process in the long run. 

Dr. DILLINGHAM. Mr. Meehan, if I could. 

Mr. MEEHAN. Yes, Dr. Dillingham. 

Dr. DILLINGHAM. There are several initiatives on the way. I just 

want to relate back to your point about NextGen. 

Although NextGen has been going on for 10 years, we are now 

beginning to see NextGen being put in place, a suite of NextGen 

technologies, like in the Houston Metroplex. 

And so that is going to make going and coming out of that metropolitan area much smoother, much more environmentally friendly. 

At the same time, the question you raised earlier with regard to 

sort of what else is NextGen going to do, well, we have said a number of times before this committee that NextGen is not going to be 

enough, that it is going to address some of our problems, but as our 

passenger traffic increases, we are going to need to lay some more 

concrete. 

And FAA currently has a study underway that identifies—I 

think it is the third iteration of a study that identifies where that 

congestion is going to be and where the concrete needs to be laid. 

So there are a number of avenues coming together to address the 

issues that you presented. 

Mr. MEEHAN. When do you expect that report to be concluded? 

I am asking Dr. Dillingham. 

Dr. DILLINGHAM. Well, he can tell you when the FACT report is 

going to be concluded. I just know they are doing it. 

Mr. MEEHAN. When? 

18 

Mr. DE LEON. Yes, sir. The report is scheduled to be concluded 

by the end of summer, or beginning of fall. 

Mr. MEEHAN. OK. Thank you. 

Mr. Chairman, I yield back. 

Mr. LOBIONDO. Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. 

Thank you, gentlemen. 

We are faced with another situation. People want more money 

than we have. Gee, how unusual. Never heard that before. And I 

am told that airports have plenty of money. 

But am I wrong to think, Mr. De Leon, that all the major airports, all the medium-size airports, are basically publicly owned 

and financed? Is that a correct assumption? 

Mr. DE LEON. All of the large major airports are publicly owned. 

Yes. 

Mr. CAPUANO. Which means the taxpayer is on the hook if an 

airport has a financial problem. May not be a Federal taxpayer, but 

they are my taxpayers, too. It may be State or local or regional, but 

it is a taxpayer. 

Mr. DE LEON. Well, the large hub airports have other funding 

mechanisms they can tap into. 

Mr. CAPUANO. I understand that. 

But those bonds and everything—if everything goes bad, who is 

on the hook if Logan Airport goes bankrupt? Massachusetts taxpayers. 

Mr. DE LEON. That is correct. 

Mr. CAPUANO. That is right. 

If their bond rating goes up because they overextend themselves 

and something goes bad, who is on the hook? 

Mr. DE LEON. The owner. 

Mr. CAPUANO. Taxpayers. My constituents, my taxpayers. Now, 

I am not against that. I am a liberal. I don’t mind taxing people 

for things they want. 

But I want to be clear that airports are not some private entity. 

They are taxpayers who gather together to do something. 

Private financing. I have heard some comment on that. We just 

went to LaGuardia on a P3 field hearing at which they told us, yes, 

they are going to use private financing for one reason and one reason only. Because they have to do the work, in their estimation, 

and they can’t get the money anyplace else. 

So private financing is not some panacea. Private financing is the 

result of not having enough money. And, yet, today I hear there is 

a $4 billion surplus. 

Now, based on my math, on the surface transportation, which 

has to be somewhat relevant, approximately each billion dollars 

makes 30,000 jobs. We are talking 120,000 jobs are going unhad in 

this country today because we have uncommitted money that has 

been paid by taxpayers. 

I come from a different universe. That strikes me as insane. Get 

that money to work. Put people to work. Address some of these 

issues so we can have an honest and legitimate discussion about 

where the money should come in the future. 

Mr. Dillingham, has GAO ever done a study on bang for the buck 

relative to PFCs and AIPs? 

19 

Dr. DILLINGHAM. What we have done is we have looked at what 

PFCs have been used for, how those uses coincide with the statute. 

I am not sure—— 

Mr. CAPUANO. Well, the reason I ask is because there are a fair 

number of airports around the country that, especially the last couple of years, with contractions—we now have pretty large investments in airports that are now underutilized. 

If the argument is that the expansion of airports is important to 

our economy, shouldn’t we be spending money where the economy 

is best enhanced, either through passengers or delay reductions or 

other such items that do have a direct impact on the economy, as 

opposed to letting taxpayer dollars be used to—oh, I don’t know— 

maybe put another clothing store in a mall? 

By the way, have either if you gentlemen ever bought a suit at 

an airport? 

Dr. DILLINGHAM. I can’t afford them, Congressman. 

Mr. CAPUANO. Very good answer. 

Yet, taxpayer dollars—some of these dollars, on occasion, are 

used to support the expansion of airport malls. That strikes me as 

very bad prioritization. 

Now, if an airport wants to create a mall, let them do it with 

their own money. Never, never—‘‘never’’ for those of you who don’t 

speak English—never allow taxpayer dollars that are meant to address safety and efficiency be used to sell a suit. 

Now, I have to buy suits, too. I have never bought one in an airport. It just strikes me that our priority is wrong. 

We are having this discussion prematurely. We have money in 

the bank not being used to do the things we need to do. We are 

not sure what the priority should be. Yet, there is extra demand. 

Well, demand for what? To have another glorious terminal? 

I have never once in my entire political life had somebody call 

and say ‘‘I didn’t like the terminal.’’ I get lots of calls saying delays, 

cancellation. I get lots of calls, costs, extra fees. I have never had 

anybody say ‘‘Oh, the terminal wasn’t pretty.’’ 

Prioritization, gentlemen. Use the money more wisely than we 

have, then come back to us and talk to us about increasing costs 

and fees to taxpayers, and the public. 

Thank you, Mr. Chairman. 

Mr. LOBIONDO. Mr. Farenthold. 

Mr. FARENTHOLD. Thank you very much, Mr. Chairman. 

I will say to the gentleman from Massachusetts, you probably 

haven’t flown out of terminal A here at Reagan National Airport 

lately because that one is ugly. 

But I do want to address a couple of questions to our witnesses. 

There has been a lot of talk about the PFC. What are some alternatives that are available to airports for funding? We have heard 

public-private partnerships, we have heard direct tax subsidies, 

both from the State, Federal, and local government. Are we missing 

anything in there? 

I will ask both gentlemen. We will start with Mr. De Leon. 

Mr. DE LEON. No, I think you have probably covered it. Privatization is one of the things we are looking at right now. It hasn’t 

taken off in the States, as you know, but we have an approved apVerDate Aug 31 2005 14:17 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\AV\6-18-1~1\88353.TXT JEAN
20 

plication in San Juan, Puerto Rico. It is pretty interesting. It looks 

like it is very promising. 

Other than that, I think you have covered all of the other avenues that I can think of. 

Mr. FARENTHOLD. Mr. Dillingham, are we missing anything 

there? 

Dr. DILLINGHAM. No, I think you did—I think you covered it. If 

you included nonaeronautical revenues, land-side revenues that 

have been increasing at about 4 percent a year over the last few 

years, so to the point that they are now representing about 45 percent of airport revenues. 

Mr. FARENTHOLD. Now, do these shopping malls actually make 

money and pay for themselves? 

Dr. DILLINGHAM. I don’t really know. I would assume that there 

is a little bit of both in terms of some make money, some don’t. 

There is also the notion of, you know, street-level pricing, where in 

some cases, airports, you know, what you pay in the airport is supposed to be, you know—— 

Mr. FARENTHOLD. All right. I understand that is a contractual 

provision in some airports—— 

Dr. DILLINGHAM. Right. 

Mr. FARENTHOLD [continuing]. That you have to be competitive 

in the pricing. 

Dr. DILLINGHAM. Right. 

Mr. FARENTHOLD. And I will on behalf of my chief of staff who 

left his belt at TSA was very thankful he could purchase a belt at 

the Houston airport when he got there and realized he left his belt 

in Washington. 

Let’s talk a little bit about PFCs. We have heard a lot of reference to them as taxes, but they sound to me more like a user fee. 

If airports are directly subsidized by the cities or the Federal Government, the nonflying public is paying for that, which I guess is 

OK because they receive the benefits of the economic activity that 

the airports generate, but don’t you think that PFCs might be more 

accurately described as a user fee than a tax, Mr. De Leon? 

Mr. DE LEON. I have no comment on that. 

Mr. FARENTHOLD. All right, Mr. Dillingham, did you have any 

thoughts on that? 

Dr. DILLINGHAM. Well, the point that you raised, Congressman, 

is a point that has been raised time and time again, and gets to 

be one of these, you know, you say tomato, I say tomahto kind of 

thing, and it depends on who is talking whether it is a user fee or 

a tax. 

Mr. FARENTHOLD. All right, well, I appreciate you all being here. 

And I yield back the remainder of my time. 

Mr. LOBIONDO. Mr. Maloney. 

Mr. MALONEY. I have no questions at this time, sir. 

Mr. LOBIONDO. Mr. Carson. 

Mr. CARSON. Thank you, Mr. Chairman. 

Mr. Dillingham, Dr. Dillingham, thank you and welcome back. 

Please tell us, sir, more about what your study uncovered about alternative methods for collecting the passenger facility charges without really including these charges in the ticket price. Practically, 

what would you recommend we consider? 

21 

Dr. DILLINGHAM. Thank you, Mr. Carson. We completed that 

study for this committee basically, responding to the question that 

you posed about alternative ways to collect that PFC. We did not 

find any other ways at this point that was more efficient for collecting PFCs. We looked at things like smartphone apps, kiosks. All 

of those kinds of things had an impact on the convenience of the 

passenger. 

So, you know, the current system was the most efficient one that 

we have seen. We are now looking at it again, since we finished 

that last study, are there ways in which that fee could be collected 

that is different than what we looked at before in addition to those 

other questions regarding PFCs in terms of, you know, what are 

the various scenarios that Congress should have in mind as they 

think about this for 2015. 

Mr. CARSON. Secondly, and more generally speaking, in the great 

Hoosier State of Indiana, our airport directors recently briefed our 

delegation on their consensus about the need for Congress to raise 

the cap on passenger facility charges. 

Now, they are being as creative as possible to finance the critical 

infrastructure projects needed across the State, but it is simply not 

enough. 

First, what do you all think is possible, even realistic for that 

matter, for our local airports to make infrastructure improvements 

without raising their PFCs? 

And secondly, if you agree that PFCs need to be raised, how 

should that be done and what do you recommend in this context? 

Dr. DILLINGHAM. Well, I can just speak just a little bit about Indianapolis. Indianapolis is one of the poster-card airports for nonaeronautical revenues in terms of the unique sorts of things that 

they are doing. 

Indianapolis, along with Denver, is one of those airports that are 

starting to develop solar farms to provide energy as well as sell 

that energy along the way. So to that extent, I mean, that is one 

other avenue that, you know, Indianapolis is a leading actor in. 

Mr. CARSON. All right. Thank you, Dr. Dillingham. 

Thank you, Mr. Chairman, I yield back. 

Mr. LOBIONDO. Mr. Webster. 

Mr. WEBSTER. Thank you, Mr. Chairman. 

Mr. De Leon, are airports eligible for TIFIA loans? 

Mr. DE LEON. No, that is a separate funding program administered by the Department of Transportation. 

Mr. WEBSTER. So is that by policy or by statute that they would 

keep them from being eligible? 

Mr. DE LEON. I would say it is statute, but I will check on that 

and get back to you. 

Mr. WEBSTER. Dr. Dillingham, you had mentioned that NextGen 

potentially would exasperate the fact of a lack of facilities at particular air sites, airports because, I assume, that more efficiently 

and maybe even more frequently planes could land and yet there 

might not be a terminal to accommodate them, which would call 

for, I assume, more infrastructure as you put it, concrete at that 

location. 

22 

Is there any study that you have done on the return on investment of every dollar, let’s say, is spent at an airport; is there some 

sort of factor like 7:1, 6:1, or anything like that? 

Dr. DILLINGHAM. Congressman, we have not done any studies 

like that, but I am familiar with many metropolitan areas where 

airports are located. They have conducted those studies to talk 

about the economic impact of their airport and aviation to the community, and you know, and we can provide, you know, references 

to those if you would like, but we have not done any studies like 

that directly. 

Mr. WEBSTER. Well, it was asked earlier, I believe, something 

about, you know, where do we get the bang for the buck, and where 

are the priorities? I think it would behoove us to know if this would 

be the very best investment of our infrastructure dollars maybe 

here. I don’t know that it is, and maybe no one does, but it certainly would be nice to know. 

Dr. DILLINGHAM. Yes, sir. 

Mr. WEBSTER. Yield back. 

Mr. LOBIONDO. Mr. Davis—Mr. Williams. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

I am from Texas. We have got a lot of airports there, and we appreciate you all being here today. 

My first question would be to you, Dr. Dillingham. You said that 

airports are seeking great—more private sector partnerships. I am 

a big private-sector guy. I believe in the private sector, everything 

from construction to ownership of terminals. We talked about that. 

What are the implications in Federal funding for an airport with 

various levels of privatization, such as long-term leases and publicprivate partnerships? 

I guess my question would be, will Federal funding still be needed or required if we really get engaged with the private sector and 

let the private sector move us forward on this? 

Dr. DILLINGHAM. I guess the best answer is, it depends. Depending on the arrangements, the privatization type arrangement, longterm lease or full sale, those airports will still be eligible for certain 

Federal funds. 

The airport that was mentioned, the only airport that has been 

privatized to date is in San Juan, and, you know, as a result of 

that, that airport has been upgraded. 

Mr. WILLIAMS. So the more private-sector involvement would decrease the need for Federal funding? 

Dr. DILLINGHAM. I think so. 

Mr. WILLIAMS. That is a good thing. 

Dr. DILLINGHAM. Yeah, that is a good thing. 

Mr. WILLIAMS. OK, thank you for that. 

Mr. De Leon, my question would be, I am glad that we got $4 

billion in cash. As a small business owner that is important, 

cashflow is important. But my question to you with would be, and 

we talked about this, but the current funding stream, is it enough 

now to sustain all of the demands we are looking forward for? I 

mean, is it—— 

Mr. DE LEON. If you look at our NPIAS, National Plan of Integrated Airport Systems report, it implies that we are not meeting 

all of the demand out there. There is more demand than we have 

23 

funding for. But, as Mr. Dillingham mentioned, we are looking at 

what is really needed today and that is how we approach demand 

with our airport sponsors. We try and work with them on what is 

really needed today and not just plan. 

We manage demand the best we can, but there is more demand 

than there is funding available. 

Mr. WILLIAMS. We talked a lot about available funding, but as 

a business person, you know, you can generate cash through more 

business, or I guess you can raise prices which sometimes is not 

the best thing, or you can cut expenses. 

So I guess my question to you would be, you know, since September of 2008, small business owners have really had to cut back. 

They have had to cut back on a lot of things to create their own 

cashflow and continue to do business. What are you all doing to cut 

expenses and pass that on to the consumer? 

Mr. DE LEON. So within the FAA, what are we doing to cut the 

expenses? In my organization, to maximize the use of the AIP dollars as much as we can, we work with airport sponsors to possibly 

phase out projects over a longer time, which is not always good, but 

not a bad way to proceed because you have a limited amount of 

money. 

Our organization is not streamlining people, retiring people, if 

that is what you are leading to. We work with the AIP program 

as best as we can to maximize the return on it. 

Mr. WILLIAMS. But are there costs you can cut that would turn 

into cashflow and turn into giving people more service and better 

service? Every business has a surplus of whether it be people, or 

costs. I mean, every business needs to be able to cut costs and that 

was my question. I mean—— 

Mr. DE LEON. I don’t think I could answer the question in terms 

of cutting costs. We are trying to improve efficiencies on what we 

have. 

Mr. WILLIAMS. OK. 

Mr. DE LEON. As a business you try to maximize your efficiency 

as best as you can. We are looking at ways to become more efficient 

in the way we administer the program. 

Mr. WILLIAMS. OK, thank you very much. 

I yield back. 

Mr. LOBIONDO. Mr. Davis. 

Mr. DAVIS. Thank you, Mr. Chairman, and thank you, Dr. 

Dillingham, and Administrator De Leon for being here today. 

I just have one question for both of you. The American Association of Airport Executives is represented on the next panel and in 

their testimony, they cite a study that says in the next 5 years, 24 

of the top 30 airports will experience Thanksgiving-like passenger 

levels at least 1 day a week, and as a passenger who travels during 

the holidays, I know that can be daunting. 

Can both of you address this statistic and then what is being 

done now and what more could be done to prepare for such passenger levels at those airports? 

Dr. DILLINGHAM. Mr. Davis, I can’t refute or support the AAAE’s 

numbers, however, you know, over time the delay factor for airports has declined. It used to be one in every four flights was delayed. FAA has made significant improvements on that. 

24 

Going forward, I think we are all relying on the implementation 

of NextGen and the procedures that are associated with it, both on 

the ground, and the technology associated with GPS. I think that’s 

where our hope is at this point, and, what we are talking about 

today in terms of having the appropriate infrastructure to handle 

that predicted increase in traffic is also an element going forward 

that hopefully will address those issues that AAAE has raised. 

Mr. DAVIS. OK. Administrator De Leon. 

Mr. DE LEON. As Dr. Dillingham mentioned, we are completing 

the future airport capacity task force study known as FACT3. It is 

going to come out in later summer, or early fall. When you look at 

that report there is not going to be any surprises. It is going to look 

forward at operations at the airports for 2020 and 2030. 

It considers all of the improvement that is in the pipeline for 

these airports, and also considers NextGen technology that will be 

on board at that point in time. When you look at it, you will see 

that for the first decade, the hub system overall is in fine condition. 

When you look at 2030, there are many unknowns because of all 

of the things that are happening in the aviation industry right 

now, so we can’t predict with certainty what is going to happen in 

2030. As we move to 2030, our thought is that we are going to approach that cautiously in the planning process and keep an eye on 

the system going forward. 

Mr. DAVIS. All right, well thank you both for your time today. 

I yield back Mr. Chairman. 

Mr. LOBIONDO. Mr. Duncan. 

Mr. DUNCAN. Well, thank you very much, Mr. Chairman. 

Dr. Dillingham and Mr. Capuano mentioned that he and I and 

several others met yesterday with some of the top people from Wall 

Street, and they said that they were finding more interest and receiving many more phone calls about public-private partnerships in 

regard to infrastructure than ever before, in fact, they were surprised by the amount. Do you think that—and many other—most 

other developed or developing countries have been going more in 

that direction than we have. 

Do you think that we will be seeing much more of that? We met 

after the meeting with the Wall Street people. We met with the 

LaGuardia officials yesterday afternoon and they told us some of 

what they were doing. Do you see more of that in the future and 

then secondly, in a related part of that, why do you think there 

was so little interest to the privatization pilot program that we had 

in the 1996 law? You mentioned the San Juan Airport, and you 

said that that has been very successful, but it has not gone beyond 

that. Now, why do you think that is? I guess two questions there 

really. 

Dr. DILLINGHAM. Thank you Mr. Duncan. 

Yes, I would predict that we would see more private-sector involvement in infrastructure development. In the LaGuardia case, 

as was said earlier, it was the most efficient and easy way to get 

the job done in terms of waiting on the availability of Federal 

funds, or other funds. 

The privatization program, FAA’s airport privatization program 

has been available for more than a decade. It had a space for 10 

airports of different sizes to participate in the program. There have 

25 

been 10 applicants over that time period, and they have withdrawn 

those applications to the point that we only have the San Juan example. 

Part of the problem that we are seeing, again, this is another 

study that is ongoing for this committee. But part of the problem 

that we are seeing is that privatization of airports is a really complicated process in the United States, as opposed to in other countries where you don’t have as many stakeholders that you need to 

deal with. 

When we asked Wall Street about privatization, they said they 

are competing interests among all of the stakeholders. The airlines 

need something, the airport need something, the private investor 

needs something. So you know, it has just been a difficult slog. 

All of that is a really complicated issue that has made it very difficult, but you know, again, we are trying to look to see what are 

those barriers? What are those barriers that prevent this from 

working, and bring that back to this committee so that if necessary 

the committee can make whatever adjustments in the statute that 

they think are appropriate to increase the possibility of having privatization. 

Mr. DUNCAN. All right, well thank you. 

Of course you already have—maybe part of it is that you already 

have so many private businesses operating at the airports in the 

commercial real estate business and fixed-base operators and so 

forth. But thank you very much. 

Thank you Mr. Chairman. 

Mr. LOBIONDO. Mr. Ribble. 

Mr. RIBBLE. Thank you, Mr. Chairman. 

One of the thing that we need more than anything is accuracy 

and in the projections and in the data so that we can actually 

evaluate how we are going to go ahead and either modify or provide current financing. 

Dr. Dillingham, in your written testimony I am quoting from 

page 5, you say: ‘‘In addition, according to the most recent FAA 

forecast air traffic demand is projected to increase 2.7 percent per 

year from 2014 through 2034. Funding for both AIP and PFCs is 

linked to passenger activity. In this way, Congress aims to direct 

funds to where it is needed most.’’ 

Have you done any analysis to determine whether the projections 

from, or the forecast from FAA are accurate? 

Dr. DILLINGHAM. We have looked at some of FAA’s forecasts in 

various arenas and as you know, the further out you go with the 

forecast, the less reliable it becomes. 

So in the case of FAA’s forecast for infrastructure needs, the fact 

that they do it over a 5-year period with a relook every other year, 

makes it a lot more—as accurate as you can be under the circumstances and, you know, if there are no, you know, unforeseen 

circumstances, like we don’t have another recession, we don’t have 

another SARS epidemic or something like that, you know, we are 

pretty confident at least a year or two out in terms of FAA’s forecast and with the revisions, you know, it is probably as good as can 

be expected under the circumstances. 

Mr. RIBBLE. Well, Mr. De Leon, let me give you some data. In 

2001, FAA forecasted U.S. airlines would carry 1 billion passengers 

26 

by 2012. In 2008 the agency pushed that milestone to 2016, in 

2010, it was postponed to 2023, and finally this year it was postponed to 2027. 

What methods do you use in your forecast and is there a problem 

in the methodology? If the forecasts are that far off, are they still 

a useful measurement for the Congress to use? 

Mr. DE LEON. I am sorry, I will have to get back to you on the 

methods of forecasting. That is not in my area, but I will get back 

to you on the methods used—— 

Mr. RIBBLE. Thank you. I would appreciate that, thank you. With 

that then, not really knowing how you are going about that, it is 

not particularly helpful at this time, but I can tell you that we 

can’t make decisions when the data is so far off. 

Actual passengers in 2012, by the way, were 730 million so the 

FAA missed that projection by roughly one-third. It creates a real 

problem for us and so the data that is being provided is really critical for us to make the right decisions. 

So, Mr. Chairman I yield back. 

Mr. LOBIONDO. OK, any further questions for this panel? 

Dr. Dillingham, Mr. De Leon, we thank you very much and the 

first panel is excused. 

We will now take just like a 30-second recess for the second 

panel to get in place. 

Dr. DILLINGHAM. Thank you, Mr. Chairman. 

[Recess.] 

Mr. LOBIONDO. Everybody ready? OK, we will reconvene. 

I would like to welcome our second panel. The second panel includes Mr. Mark Baker, president and CEO of Aircraft Owners and 

Pilots Association; Mr. Todd Hauptli, president and CEO of American Association of Airport Executives; Ms. Sharon Pinkerton, senior vice president of legislative and regulatory policy for Airlines for 

America; AND Mr. Mark Reis, chairman of the board of directors 

of Airports Council International—North America, and managing 

director for Seattle-Tacoma International Airport. 

So we welcome you, and Mr. Baker, we are waiting for your 

statement. 

TESTIMONY OF MARK BAKER, PRESIDENT AND CEO, AIRCRAFT OWNERS AND PILOTS ASSOCIATION; TODD HAUPTLI, 

PRESIDENT AND CEO, AMERICAN ASSOCIATION OF AIRPORT 

EXECUTIVES; SHARON PINKERTON, SENIOR VICE PRESIDENT, LEGISLATIVE AND REGULATORY POLICY, AIRLINES 

FOR AMERICA; AND MARK REIS, CHAIR, AIRPORTS COUNCIL 

INTERNATIONAL—NORTH AMERICA, AND MANAGING DIRECTOR, SEATTLE-TACOMA INTERNATIONAL AIRPORT 

Mr. BAKER. Thank you leadership and the Members. I represent 

the Aircraft Owners and Pilots Association, and as an experienced 

aviator who has had the opportunity to land in over 50 States in 

this beautiful country, I also represent a business background in 

making decisions about things that go on in and around aviation 

communities. 

AOPA has over 350,000 members nationwide, is a nonprofit, individual membership organization. AOPA’s mission is to effectively 

represent the interests of its members as aircraft owners and pilots 

27 

concerning the economy, safety, utility and the popularity of flight 

of general aviation aircraft. As pilots flying in the United States, 

we are fortunate to have access to the safest and most efficient air 

transportation system in the world. The aviation network of over 

5,200 public-use airports complemented by more than 13,000 privately owned landing facilities is a unique national resource. General aviation is a significant economic engine that contributes $150 

billion to the annual gross domestic product and approximately 1.2 

million jobs in communities nationwide. Each year 170 million passengers fly using personal aviation, the equivalent of one of the Nation’s largest airlines, almost 20 percent of all airborne passengers. 

In addition to directly creating jobs, the general aviation airports 

attract businesses to the communities where they are located, delivering economic benefits far outside the airport boundaries. They 

may serve as a reliever airport in congested metropolitan areas offering aircraft, including airliners, a safe place to land in the event 

of an emergency. 

America’s airports are the true backbone of aviation, and without 

a robust network, aviation cannot continue to grow. It is important 

to note that all of the new technologies and capabilities under discussion with NextGen will be underutilized unless pilots have a 

place to take off and land. America’s GA airports foster air transportation and link many communities to our aviation system in 

many ways that cannot be achieved by the reliance on a few hundred primary airports. Of the 3,300 airports included in FAA’s National Plan of Integrated Airport Systems—NPIAS—only 499 support scheduled, commercial air service. 

For many other aviation needs, Americans rely on the other 

2,563 public-use landing sites to link America’s vast rural expanses 

to the larger world. 

GA airports support a wide range of other vital activities including agriculture, law enforcement, emergency medical transportation, firefighting, pipeline patrol, environmental monitoring, 

package delivery, wildlife management, and tourism. 

The broad range of humanitarian and charitable activities also 

rely on general aviation airports. Small general aviation airports 

are frequently used to deliver humanitarian aid following natural 

disasters such as hurricanes or earthquakes. In addition, general 

aviation aircraft operating from small airports are routinely used 

by charities to connect wounded veterans to their families, bring 

patients specialized medical care, and perform dozens of other humanitarian and charitable services. 

Airports are critical to the aviation transportation system, similar to the on-and-off ramps of our Federal highway system. Congress has wisely recognized that a Federal aviation network is only 

possible by using tax revenues from various parts of the system for 

financial support. To illustrate how similar this is to other modes, 

if Federal highways had been built in only those States that have 

contributed since 1956, the interstate and U.S. highway system 

would only exist in 15 States. Drivers in those States have in essence ‘‘subsidized’’ Federal-aid highway construction in the other 

35 States and the District of Columbia. 

AOPA strongly supports the financing approach of using the 

time-tested systems of passenger transportation and aviation fuel 

28 

taxes in combination with the general fund tax revenues to support 

the FAA and the aviation system. 

Funding for the Airport Improvement Program—AIP—comes 

from the FAA’s Airport and Airway Trust Fund, which receives 

revenues from a series of excise taxes paid by users of the National 

Airspace System, including taxes on aviation fuels. The trust fund 

was designed to finance investments in the airport and airway system, and to the extent funds were available, cover the operating 

costs of the airway systems as well. 

However, no general fund revenues are appropriated to support 

AIP. The Airport Improvement Program provides grants to public 

agencies, and in some cases, to private airport owners for the planning and development of public-use airports that are included in 

the NPIAS, which is developed by the FAA and submitted to Congress every 2 years. The AIP grants for planning, development, or 

noise compatibility projects may go to these federally identified 

public use airports including heliports and seaplane bases. For 

small primary, reliever, and general aviation airports, the grant 

covers 90 percent of eligible costs. 

Projects eligible for AIP grants include improvements that enhance the airport safety, capacity, and security, or meet environmental needs. 

Without the assistance of Federal funding, many small airports 

could not perform the necessary maintenance projects to ensure 

runway safety, provide airport lighting, or offer essential services 

like hangars and tie-downs. 

The FAA’s most recent NPIAS report to Congress indicates that 

America’s airport infrastructure needs are significant. Over the 5 

years from 2013 to 2017, FAA estimates that airports will require 

$42.5 billion to meet all AIP-eligible infrastructure demands; significantly more than the authorized level in the AIP funding for 

that period. Despite the growing need, AIP funding remained at 

annual levels of roughly $3.5 billion since fiscal year 2005, until it 

took a slight drop to $3.35 billion. Based on these numbers, it is 

clear that the need and the annual funding levels are out of balance, and all the while projects continue to manifest. 

In conclusion, general aviation airports play a vital role in the 

life of this Nation. The need for infrastructure, security, environmental improvements, and safety are important and continues to 

grow. On behalf of more than 350,000 members of AOPA, we appreciate your leadership in addressing the funding concerns of general aviation so our national transportation system can continue to 

serve the economic, social, and humanitarian needs of this Nation. 

Thanks for the opportunity to contribute. 

Mr. LOBIONDO. Thank you. 

Mr. Hauptli. 

Mr. HAUPTLI. Mr. Chairman, thank you for the opportunity to be 

here today. It is always good to be back before the committee. 

I have two fundamental points I would like to make this morning. One: Airports need more resources. As frequent travellers, you 

all know that the airports are teaming with people in the terminals 

and on the tarmacs. There are facilities that need upgrade and upkeep. Many of these facilities designed and constructed at the dawn 

of the jet age. 

29 

Do any of us in this room really believe there will be less traffic 

in the future than there is today in an already constrained environment? I think not. Near-term Band-Aid approaches aren’t going to 

serve the long-term needs of the passengers, our communities, or 

future generations, and we have neglected infrastructure investments across all modes of transportation for too long. Good enough 

for now isn’t good enough. My members have an obligation to plan 

for tomorrow. 

Point two: The passenger facility charge is the best mechanism 

to deliver this additional resource in today’s current budget environment. In the absence of increased Federal funding, the best way 

to close down this airport infrastructure development gap is to increase the passenger facility charge, to give the airports the selfhelp they need to get the job done. The Federal cap on local PFCs 

was last increased in the year 2000, 14 years ago and to the Members on this side of the dais, I would say in light of tomorrow’s 

vote, I would observe that in light of tomorrow’s vote for the majority leader and the majority whip positions, the last time Congress 

increased the passenger facility charge it was under the watchful 

eye of Dick Armey as majority leader leader and Tom DeLay as 

majority leader whip, two conservative Republican Members who 

understood the difference between a tax and a user fee, like all of 

this committee does intuitively, and Mr. Farenthold mentioned that 

earlier this morning. 

In the intervening 14 years, the purchasing power of the PFC has diminished dramatically from $4.50, to less than $2.50. We are 

asking this committee to increase the passenger facility charge to 

$8.50 with periodic indexing for inflation. That will simply restore 

the purchasing power of the PFC that has been lost over the years, 

and remember, PFCs are locally imposed, locally justified, locally 

collected, and locally spent in their communities to meet the pressing needs for future growth. 

Now, we recognize that an increase in the passenger facility 

charge is opposed by our colleagues in the airlines, who contend 

that infrastructure needs are being met and that an extra $4 in 

fees would significantly decrease demand for air travel. Well, just 

this morning in the newspaper I saw that in the last month alone, 

airline fares increased 6 percent, the single largest increase in the 

past 15 years and if you looked at May 2013 to May 2014, fares 

have increased by 5 percent. 

Now, under the airline logic, where they say that for every dollar, or for every 1-percent increase in fares there is a greater than 

1-percent decrease in demand for air travel, if that were to be true, 

clearly we should see a greater than 5-percent decrease in air traffic as a result of the past year. However, traffic hasn’t gone down. 

Demand hasn’t gone down. It has gone up and so it is time to lay 

to rest this elasticity of demand argument as it relates to the passenger facility charge and we haven’t even mentioned of course the 

issue of bag fees and a $25 or $30 bag fee and its impact on travel. 

Mr. Chairman, there is clearly a difference of opinion between 

airports and our airline partners on the status of airport financing 

in the path forward. I believe that difference can best be explained 

by the fact that the airlines view the world in a 90-day increment. 

What is the next financial statement for their shareholder report. 

30 

Airports have an obligation to look to the future. It takes 2 years 

and 3 years and 5 years and sometimes 10 years and longer to 

build major infrastructure projects in this country. An airport has 

to look out for the long-term interest of its community. The tension 

between these two positions, between the airports and the airlines 

is understandable, but we need you as policymakers to recognize 

the difference between these two viewpoints, and make decisions 

that are in the long-term, best interest of the country. 

Again, two simple points: One, we need more resources. And two, 

the passenger facility charge is the best mechanism to deliver those 

additional resources. Thank you. 

Mr. LOBIONDO. Thank you. 

Ms. Pinkerton. 

Ms. PINKERTON. Thank you, Mr. Chairman, and Mr. Ranking 

Member, I appreciate the opportunity to be here today to discuss 

the state of airport financing. 

From A4A members’ perspective there are three overarching considerations in evaluating airport infrastructure and financing 

needs. First, airlines need infrastructure. We more than any other 

stakeholder must have sufficient resources to be able to meet the 

needs of our customers efficiently and effectively. We work in close 

collaboration with airports large and small in order to make sure 

that necessary capital projects are funded. 

Second, U.S. airports enjoy consistent and reliable access to 

ample and an enviable variety of financial resources to pay for airport projects. There is no current or foreseeable crisis in airport 

funding, in sharp contrast to the issues you are dealing with the 

Highway Trust Fund today. 

And third, funding policy should be driven by airport development needs. This demand focused approach has repeatedly demonstrated projects can be paid for within existing financing means. 

There is simply no empirical justification to raise airport-related 

taxes, especially when revenue from other resources is so abundant. 

The U.S. airline industry in collaboration with our airport partners has been supporting investing in billions of dollars of airport 

infrastructure. These investments have accelerated in the past few 

years and are made possible by our improving finances in places 

such as JFK, Miami, San Diego, Houston, and other areas. 

A financially healthily airline industry also translates into an especially healthy airport trust fund which has enjoyed record-high 

revenues from commercial sources. We had a record-high $12.7 billion in revenue in 2013 and the highest uncommitted balance in 

over 13 years. That is $5 billion at the end of 2013 and it is projected to be $6 billion in 2014. 

Airline airport collaboration has worked well. U.S. airlines enthusiastically support necessary airport improvement projects. In 

fact, we are in the midst of massive infrastructure investments 

across the country as seen in some of the slides above. This has occurred in close collaboration with airports and has yielded results 

we can all be proud of. Since 2008 the largest 29 airports alone 

have started or completed $52 billion worth of capital projects. 

That is new runways, new international passenger facilities, and 

31 

new or substantially renovated terminals at both large and small 

airports. 

Let’s talk about how airports are doing. In 2013 airports collected nearly $24 billion in revenues. A record-high level, part of that is 

the PFC, $2.8 billion. Part of that is the AIP program, $3.35 billion. 

That is especially helpful for smaller GA airports, and then U.S. 

airports actually have $10 billion on hand in cash in investments. 

All of these numbers point to a financially strong airport community. Standard & Poor’s gives every single airport it evaluates investment grade credit ratings. Airports and airlines have been able 

to take advantage of those credit ratings to secure affordable funding for demand-driven financially justified projects that increase 

capacity and efficiency. 

Let’s talk about air travel for a moment. The current number of 

operations today is still lower than what we had in 2007 and the 

FAA projects that we won’t be back to those 2007 level of operations until 2033. So while airport projects will continue to be necessary, the airport system in the United States does not have to 

build to accommodate rapid or unmanageable growth. Improvement 

projects can be paid for with existing revenue streams with no need 

to pursue an increase in the PFC. 

Bonds remain the primary source of funding for airport capital 

projects. Historically, and even today where 50 percent of all 

projects are funded through bond funding. Airports enjoy access to 

bond financing at very good rates because of their good investment 

credit ratings. No U.S. airport to our knowledge, has been unable 

to secure bond funding for an airport improvement project. 

Another reason not to increase the PFC is that U.S. airlines and 

their customers already pay over $19 billion in taxes and fees, soon 

to be $20 billion once the TSA fee goes into effect next month. We 

are already taxed at a rate higher than alcohol and cigarettes, 

products that are taxed to discourage their use. We have heard 

every dollar in the PFC means $700 million cost to the passenger. 

Raising the PFC cap hurts demand, hurts traveling tourism, and 

negatively impacts small community service. While it is intuitive 

that raising the cost of something results in less of it, the GAO has 

also found in 2012 that increasing ticket taxes in the price by 1 

percent results in 1 percent—greater than 1 percent fewer tickets 

being sold. 

In conclusion, today we have a win/win formula, that provides for 

needed infrastructure, funding, and consists of close collaboration 

with airports, disciplined demand-driven development of infrastructure projects, continued reliance on tried and true funding sources, 

and avoiding punishing the traveling public with additional taxes. 

We need to stick with that formula. 

Thank you. 

Mr. RIBBLE [presiding]. Thank you. 

And Mr. Reis, you can go ahead with your testimony. 

Mr. REIS. Thank you, Mr. Chairman and Ranking Member 

Larsen and members of the subcommittee. Thank you for inviting 

me to participate in today’s hearing. 

The airport community appreciates the opportunity to explain 

the state of airports and our challenging capital needs. The significance that both ACI–NA and AAAE are representing here today 

32 

are two organizations are unified in our efforts on the upcoming 

FAA reauthorization particularly when it comes to airport financing. So I am very pleased to have the opportunity to speak today 

with our partner Todd Hauptli. 

I am the managing director of the Seattle-Tacoma International 

Airport, and I am here today in my capacity as chairman of Airports Council International—North America. In addition to my testimony today please accept my written statement which offers a 

fuller overview of the complexities of airport finance, the sources 

and uses of airport revenues, and the financial challenges airports 

face today. 

As has been established, airports are hubs for economic growth 

within local communities across our Nation, U.S. airports, though, 

lack the ability to raise the revenues necessary to meet our industry’s current and future challenges. The Federal component of our 

funding model which relies most heavily on the underfunded Airport Improvement Program, and the undervalued passenger facility 

charge user fee is antiquated complicated, tightly regulated, and 

not sustainable as we plan for the future. 

In the United States, the average airport facility is more than 40 

years old, it is growing increasingly difficult for us to balance maintenance costs and expansion plans with limited financing options. 

We have identified more than $71 billion in capital improvements 

for security, safety, rehabilitation and facilitation needs that are 

essential over the next 5 years. Examples include a $95 million 

runway safety area at Oakland, and a $100 million runway reconstruction project at Sea-Tac. 

The limited AIP and PFC funding capacity available is only a 

fraction of our overall need. Especially with so much of future airport revenues including the PFC user fee already pledged to existing debt service. The challenge for Congress, the airports and our 

airline partners will be to find a so luck that addresses the need 

in a practical and a sustainable way. We believe that restoring the 

purchasing power of the PFC user fee to $8.50, and indexing it to 

inflation is the best solution but it is not the only possible solution 

to this challenge. 

Congress could increase AIP funding to go meet the urgent infrastructure needs of America’s airports, but that would require at 

least a doubling of the annual AIP appropriation. So while increasing AIP is certainly an option in theory, we understand the congressional focus on decreasing Federal spending and its lack of interest in increasing Federal aviation taxes makes this option unrealistic. 

The U.S. aviation industry faces a global challenge. U.S. airports 

need to stay competitive. Airports in Canada, in partnership with 

their airline customers have implemented passenger user charges 

known as the airport improvement fees otherwise called AIF, in 

order to fund needed airport construction and improvements. But 

unlike the PFC, these fees are not capped by the Canadian Federal 

Government. The AIF at some Canadian airports is as high as $30 

per passenger. While this is another alternative, we believe the 

PFC can be updated for a fraction of the Canadian AIF by restoring its purchasing power and periodically adjusting it for inflation. 

33 

Which brings us back to what I indicated previously to the best 

alternative. By restoring the spending power of the PFC user fee, 

this Congress can craft a solution that will allow us to meet the 

critical infrastructure of Americans airports and do it cost effectively for airports, airlines, and our passengers. Updating the PFC 

user fee also increases local control and puts decisions into the 

hands of local authorities who are best able to determine the level 

of user fee which is appropriate for their community. By raising the 

cap of the PFC, this Congress can ensure that our airports continue 

to be engines of economic growth in their respective communities 

and across the country. 

This subcommittee will have a significant impact next year on 

the future of airport financing. The airport community remains 

committed to working alongside you and other aviation shareholders to develop a sustainable means to satisfy the demands of 

21st-century traveling public. 

I look forward to your questions. 

Mr. RIBBLE. Well, thank you all for your testimony. 

By the way, my name is Reid Ribble. I represent Wisconsin’s 

Eighth Congressional District. So it has Appleton and Green Bay, 

Wisconsin. 

Thanks for your testimony. 

Mr. Baker, I am going to start with you if I could. Could you give 

us an idea of the cost of general aviation to the pilots? What types 

of fees are they paying, and what is the work that goes into being 

a general aviation pilot and the costs related to that? 

Mr. BAKER. First, the cost of acquiring a pilot’s license would be 

where most people start. We graduated about 22,000 pilots last 

year. Some will head off into commercial aviation. Some are just 

training for recreation or business aviation. We think about the 

basic license of a private pilot today running anywhere from $7,000 

to $10,000 just to get your first primary license. If you are advancing all the way up into a commercial pilot’s license, you can expect 

to pay between $80,000 and $100,000 to gain that education and 

experience today. So it is very expensive. 

And the fees associated with flying today are fuel taxes, which 

we think are a very efficient way, by the way, to pay into the system. The more you fly, the more you pay, and this is the best 

model for general aviation. 

But there are other fees and taxes that are starting to creep into 

the system. In many cases there are landing fees, service fees, and 

a host of other costs associated with using a facility at a general 

aviation airport. 

In many cases, we have a choice to avoid those additional expenses and go to smaller airports which don’t charge those fees, 

and I think you are starting to see a population of pilots that move 

in that direction. 

Finally other costs for services, such as getting your weather and 

getting your mapping, are required purchases for most pilots. 

Whether one uses either a service online, or buys physical maps 

and charts, currently it can be $1,000 or more a year. 

Mr. RIBBLE. Thank you very much. 

Mr. Hauptli—— 

Mr. HAUPTLI. Yes, sir. 

34 

Mr. RIBBLE. Look at the PFC cap, you advocate raising the cap to $8.50, and then indexing it. How is that cap actually assessed? 

Let’s say someone like me flies from Green Bay, Wisconsin, to Chicago, and then from Chicago to Houston. 

You have got a takeoff in Green Bay, a landing in Chicago, a 

takeoff in Chicago, landing in Houston; and then return, takeoff in 

Houston, landing in Chicago, takeoff in Chicago, landing in Green 

Bay. How many times is that fee assessed? 

Mr. HAUPTLI. Not more than twice in each direction. 

Mr. RIBBLE. OK, so not more than twice in each direction—— 

Mr. HAUPTLI. That is correct. 

Mr. RIBBLE. Or twice in each direction? 

Mr. HAUPTLI. Yeah, it would depending on whether or not the 

airport had a PFC imposed at that airport. 

Mr. RIBBLE. OK, in this case, O’Hare and Houston International, 

and Austin Straubel in Green Bay. 

Mr. HAUPTLI. In the case that you cited, now that Houston, in 

fact, has a PFC in place which it did not for many years, there 

would be a PFC imposed in Green Bay for taking off there, and 

then again in Chicago—— 

Mr. RIBBLE. OK. 

Mr. HAUPTLI [continuing]. On the way. And then on the way 

back it would be in Houston and then again in Chicago. 

Mr. RIBBLE. In Chicago. All right, thank you. Do you have an 

opinion, or would you agree that there is elasticity of price in the 

marketplace? Do you make decisions of purchasing based on price? 

Mr. HAUPTLI. Yes, in a conceptual way I agree there is an elasticity argument to be made, conceptually. 

Mr. RIBBLE. OK. 

Mr. HAUPTLI. And if I may—— 

Mr. RIBBLE. Yeah, Please do. 

Mr. HAUPTLI [continuing]. And I am glad that the chairman is 

back because he raised this issue earlier this morning. 

Mr. RIBBLE. We are all glad that the chairman is back. 

Mr. HAUPTLI. He asked about elasticity of demand and the airlines contend that for every 1-percent increase in fare prices, there 

is a greater than 1-percent decrease in demand for air travel. However, in the past year from May of 2013 to May of 2014, airline 

fares increased 5 percent. 

Now, you would expect based on this elasticity of demand argument that they put forward, that there would be at least a 5-percent reduction in demand for air travel. However, what we have 

seen over the past year is an increase, not a decrease, but an increase in air travel, so that elasticity of demand argument doesn’t 

work very well, at least in that example. 

Mr. RIBBLE. Ms. Pinkerton, how do you answer that? 

Ms. PINKERTON. I’m happy to answer that. Thank you. 

First of all, it is not the airlines that argue about price elasticity. 

It is every economist that studied the topic that acknowledges that 

there is, definitely, when you increase the cost of something, people 

buy less of it. So it is interesting what Todd is discussing about airfares going up. 

First of all, it is important to remember, since 2000, in real 

terms, airfares have actually dropped 10 percent. That is when adVerDate Aug 31 2005 14:17 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\AV\6-18-1~1\88353.TXT JEAN
35 

justed for inflation. So in the big picture airfares are affordable and 

they are a real value. Yes, airfares have gone up in 2013, 5 percent. That is a good thing. It is a good thing because when carriers 

are able to recognize revenues from a route, what do they do with 

that revenue? They plow it back into the route. So they may increase service, which I know all of you are interested in increasing 

service to your community. They may upgauge the plane, et cetera. 

In terms of the elasticity of demand, our fares have gone up a 

bit. The demand has probably not gone up as much as it would 

have. In other words, there is still an impact, yes. There may be 

increasing demand, but it is not going up as much as it would 

have, had there not been increased costs. 

The important thing to remember here though is, the difference 

between an increase in an airfare, and an increase in a PFC. So 

the PFC is a mandatory and systemwide increase in the cost. The 

airfare, on the other hand, is a flexible tool when the economy softens, or fuel goes over the roof, airfares can be pulled back down, 

and they often are pulled back down. But when you increase the 

PFC, I can guarantee you it will never go back down. 

Mr. RIBBLE. I am going to, one last question for you, Ms. Pinkerton, and then I’m going to turn it over to the ranking member. 

But the majority of PFC applications by airports are submitted to 

the FAA without airline objections. Can you explain why airlines 

are generally supportive of specific projects, but are opposed to 

raising the cap? 

Ms. PINKERTON. Sure I can. I think what I have tried to lay out 

in my testimony, is that what we see is airports have a toolbox of 

tools for funding airport infrastructure. And there is an abundance 

of resources right now. By the end of 2014, there is going to be $6 

billion of uncommitted trust fund balance. So PFCs were created 

as one tool in the toolbox and as I said, and I showed the $52 billion with the projects that we have supported over the past 5 years, 

we do support infrastructure projects. We need those projects, and 

we work collaboratively with airport partners on PFC projects. 

So while we do work collaboratively with them, what we are seeing is that going forward because of the resource situation that we 

are in right now with a $6 billion uncommitted balance, with alltime record revenues from commercial carriers and their passengers, all-time record revenues for nonairline revenues, there is 

really no point in increasing the PFC. You would simply be punishing the passenger who is already paying $19 billion, soon to be 

$20 billion while there is an abundance of resources available to 

fund needed projects. 

Mr. RIBBLE. All right, thank you. 

With that I yield to the ranking member, Mr. Larsen. 

Mr. LARSEN. Mr. Reis, thanks for making the trip. I understand 

you have to leave about 1 o’clock. 

Mr. REIS. Well, 1:30 is probably good. 

Mr. LARSEN. Oh, OK, great. Maybe it is me that has to leave at 

is 1 o’clock. I forget. 

Can you help us understand a little bit about this question of 

bonding capacity, how it is used, and clearly, it has to be financed. 

It is not just you have got bonds and you are given the free money 

and you never have to pay anything back. You have to have a 

36 

source of revenue to pay that back, presumably PFCs are included 

in that package of sources of revenue. But if you are limited at $4.50, or if an airport like McCarran 

as you rolled out in your written testimony, and said they pretty 

much maxed out their ability to use PFCs to finance anything 

more. They have to go to other sources. What other sources are 

there and kind of where do those burdens fall? 

Mr. REIS. Thank you. Just like most everything else, life is complicated and there is not a single answer, and of course, what is 

true and possible at Sea-Tac Airport, which is one of the fastest 

growing airports in the country where we have airlines very interested in coming to Seattle and increasing their activity at Seattle, 

is not going to be true at a smaller airport which has lost air service in another part of the country and does not have access to necessarily all of the same tools. 

So I will talk about it from Sea-Tac’s point of view and then 

elaborate a little bit about other airports. So you are absolutely 

right, Mr. Larsen, that the acquisition of funds from a bond issue 

is just a first step in a way to fund a construction program. It 

doesn’t have anything to do with the ability to pay it back. So for 

us to borrow the money, we have to convince the bankers and the 

rating agencies that we have a long-term stable source of cash to 

pay back that money. 

It is going to come from essentially one of three places. We can 

put the debt service for the bond repayment into the airline rate 

base, which of course will drive up airline costs at the airport. We 

can utilize nonairline net income to the degree we are able to generate that, and we can use PFCs to pay debt service and we, of 

course, could also use PFCs to pay for a project on a pay-as-yougo basis, but the most efficient way to use PFCs is to use it to pay 

debt service. 

Mr. LARSEN. So nonairline net income would be parking fees, 

concession fees—— 

Mr. REIS. Exactly. 

Mr. LARSEN [continuing]. The $10 that I pay for a coffee there versus the $5 I pay outside of the airport. 

Mr. REIS. I think we have had this conversation before. At SeaTac Airport, unlike some airports, we do have a street pricing point 

of view. So you are going to pay the same price at Sea-Tac inside 

the airport. 

But the net income after you pay the operating expenses for any 

of those things like concessions and parking, et cetera, is one of 

sources, and it presumably is included in the number that Ms. Pinkerton noted, the $24 billion. Well at Sea-Tac, for example, we 

have 36 competitors for our parking operation. We are making 

more than 10 percent less in parking now than we did prior to the 

last recession as a result of the competition. 

So all of these numbers don’t just go up, and of course, the airlines don’t want us to put increased debt service in their rate base 

because that causes their costs to up. 

Mr. LARSEN. And just to clarify, that the rate base—so you have 

PFCs, which you hear a lot about, but you have flexibility to negotiate with airlines on other fees, landing fees, and what else? 

Mr. REIS. Exactly. Landing fees, terminal rents of various sorts. 

37 

And each airport has a different relationship legally, contractually, from an agreement point of view, with airlines. So the ability of an airline or airlines to approve or to veto an investment is 

different, depending on the airport. 

So coming back to the PFCs, we have a $21⁄2 billion capital program scheduled for the next 10 years. We anticipate having to borrow well above $1.5 billion of that $2.5 billion. At the moment our 

PFCs are almost completely maxed out, meaning fully allocated to 

existing debt service. 

So when Ms. Pinkerton says that we have lots—‘‘abundant,’’ I 

think, is the word—of funding sources, I would—even at an airport 

that is growing, that is in a very vibrant city where a lot of airlines 

want to fly, I would dispute that we have abundant sources. 

We are seeing slow growth in nonairline revenue. We are maxed 

out in terms of dedication of our PFCs to existing debt service, and 

we will see the airline fees have to go up dramatically to pay for 

some of this capital program. 

Mr. LARSEN. I am going to have to go into detail at a different 

time, not in this hearing. 

But a recent announcement about the international arrival facility, Sea-Tac and, presumably, Delta are partnering on financing 

that? 

Mr. REIS. Well, Sea-Tac will be financing it completely. Delta is 

very supportive of it because it is important to their growth as an 

international gateway in Seattle. But that is one of the major 

projects of this $21⁄2 billion program. 

What is also quite interesting is neither Delta nor Alaska Airlines are particularly excited about growing the PFC. That said, we 

have about a $450 million terminal or concourse redevelopment 

project ahead of us that will be fully occupied by Alaska Airlines. 

We have an international arrivals facility, about a $350 million 

project, that Delta will certainly be just one of many airlines using 

it, but it will have more flights there than any of the other airlines. 

They are arguing over how we allocate the limited PFCs that we 

have available to the payment of those two projects. So they don’t 

like the PFC, in general, but they like it when it will allow them 

to decrease their terminal rent. 

Because that is, in fact, the real benefit to the airlines, is we do 

not include the cost of debt service in a rate base if it is paid for 

by the PFC. If it is not paid for by the PFC, we then charge the 

airlines for that debt service. 

Mr. LARSEN. Another set of questions for Ms. Pinkerton. 

And I am not asking this to be snarky. It might sound like it— 

because I am never snarky—because it has to do with bag fees— 

baggage fees, which is a huge source of revenue—a relative source 

of revenue for airlines, generally—— 

Ms. PINKERTON. Six percent. 

Mr. LARSEN [continuing]. And this issue of elasticity. 

So is there a price elasticity to bag fees? Have the airlines found 

that? 

Ms. PINKERTON. So I certainly understand the question on bag 

fees, but let me just start with this. 

Mr. LARSEN. Start with the answer to my question. 

38 

Ms. PINKERTON. OK. Bag fees—when we fly, we have an option 

about checking bags. 

Mr. LARSEN. Right. 

Ms. PINKERTON. You don’t have an option about whether or not 

to use an airport. 

Mr. LARSEN. Right. 

Ms. PINKERTON. So the unbundling—— 

Mr. LARSEN. I am getting to the question about dedicating that 

revenue and where that revenue goes. 

Ms. PINKERTON. Right. 

Mr. LARSEN. But have you found fewer bags, as a result of bag 

fees, going on airplanes are being checked? I have seen the overhead bins. If there is price—— 

Ms. PINKERTON. There was a change initially, but now it has actually evened out. 

Mr. LARSEN. Leveled out? 

Ms. PINKERTON. Yes. 

Mr. LARSEN. So the next question I have is: With that revenue 

or any other revenue from airlines, does all that go into airline operations, airplane purchases, or is there—given this question about 

P3 financing and so on, do airlines look at that as a source of revenue to help then on the development side of infrastructure of airports? 

Ms. PINKERTON. It is a great question. 

Mr. LARSEN. See, I told you I was getting to a nice place. 

Ms. PINKERTON. Yes. 

And so what you have seen since 2010, since airlines have started to make small margins, you have seen us plowing that money 

back into planes. 

So we have got 255 planes that are going to be delivered in 2014. 

That is good for customers. Half of those are Boeing planes. 

Most importantly, we are starting to hire people. During the last 

decade, when we lost $60 billion, we laid off a third of our employees. That was traumatic for all of us. But since 2010, we have 

started to build back up our employee base. 

In the last nine quarters, we have consecutively every quarter 

added seats. So that is exactly the kind of thing we are doing. We 

are investing back in CAPEX, is what we call it, $12 billion a year 

in capital expenditures. 

So that is for planes, for WiFi, in-flight entertainment, again, our 

employees, training, baggage systems. We have invested, Delta, 

Alaska. We have invested in baggage systems and, as a result, we 

have a much lower mishandled bag rate today than we ever did before. 

Mr. LARSEN. You see what I am getting at in terms of trying to 

figure out what are the sources or ideas out there regarding investment—— 

Ms. PINKERTON. Absolutely. And I think that the $52 billion that 

we have shown that we have invested over the last 5 years demonstrates that, when we are able to make small margins, we reinvest it back in airport infrastructure. 

Mr. RIBBLE [presiding]. Mr. Meehan. 

Mr. MEEHAN. Thank you, Mr. Chairman. 

39 

Mr. Reis, I am particularly interested in your experiences in 

Washington because, obviously, in busy airports, we are looking for 

ways to support the growth, but, also, to make sure that the resources that are coming in are going to where they are most needed. 

Explain to me the percentages, so to speak, when you talk about 

these other fees that are out there, parking, terminal rents, landing 

fees, concessions, rental cars. I mean, there is a whole series of 

other kinds of things. 

And I always get concerned—maybe it is the cynic in me—when 

I see these sort of big municipal airports. There is a lot of fat in 

there. There is a lot of jobs and other kinds of things, not performing jobs, but people that are on—how do you take parking fees 

and assure that it is, you know, an efficient price? 

I pay a lot to park. You know, people are paying $25, $30 a day 

to park. Concessions. My colleague from Massachusetts was concerned about, you know, a lot of money going in to build stores that 

you don’t see much traffic in. How are they supported? 

So where are the decisions made to assure that the dollars that 

are being raised are actually being put back in where it needs to 

be, which is a significant cost to airline, you know, infrastructure 

improvement? 

Mr. REIS. Well, thank you for the question. It is a very appropriate one. 

Let me first reinforce perhaps a little bit more clearly than what 

was stated in the previous panel. We, as airports, are not able to 

use any AIP or PFC money to build any nonairline revenue-producing facilities. So no AIP or PFC money is ever used for facilities 

at a terminal in which a retail or a dining facility will go. It is just 

prohibited. 

Mr. MEEHAN. Well, how is that funded, then? 

Mr. REIS. It is funded through nonairline revenue. 

Mr. MEEHAN. What is nonairline revenue? And how do we know 

that the moneys aren’t getting diverted into that kind of a thing 

when we need that money to go into the ability to put down more 

concrete? 

Mr. REIS. You are absolutely right. 

Congress has been very clear on the subject. The FAA is quite 

clear on the subject. 

We go through an annual audit, not just a financial audit, but 

a complex comprehensive audit that is done for any airport that 

collects a PFC or an AIP. 

Those are the kinds of questions that are asked to make sure 

that no money is diverted from an aeronautical use to a nonaeronautical use. 

So our garage, fully funded from different nonaeronautical purposes, the debt service on that has to be paid back from nonaeronautical services. 

When we build a new facility—I mentioned the reconstruction of 

this concourse—or of our north satellite concourse—we will have to 

demonstrate to the bond community and to the FAA what percentage of that reinvestment will be for aeronautical purposes, and we 

have to be very careful to not use any money that is associated 

40 

with the airlines paying us back by contract or Federal money or 

PFC or the—— 

Mr. MEEHAN. So the bottom line is I can look at an audit to determine whether there is efficiency with regard to those things? 

Mr. REIS. Absolutely. 

Mr. MEEHAN. Thank you. 

Ms. Pinkerton, I also serve on Homeland Security. And I know 

you are going to be getting a pretty hefty fee coming up, almost a 

billion dollars in new increases because of the pay for TSA. I think 

it has gone from 250 to 650. 

If you include that, you know, the security tax and other Federal 

taxes and fees that are currently paid, how much of the fees go to 

Uncle Sam as opposed to the airport? 

Ms. PINKERTON. Well, there is $3 billion in PFCs that go to the 

airport and then, of course, the $3.35 billion in AIP that goes to 

the airports as well. So that is $6 billion out of the $20 billion. 

With the TSA fee increase, passengers and carriers will be paying $20 billion in taxes—special aviation taxes every year. And so 

$14 billion goes to Uncle Sam and $6 billion goes to—— 

Mr. MEEHAN. Is this going to have an increase? Do you think it 

is going to have an impact on flight utilization demand because of 

these increases? 

Ms. PINKERTON. Yeah. I mean, as we discussed before, GAO, 

every other economist that has studied the issue acknowledges 

that, when you increase the price of something, you get less of it. 

There is no doubt about that. 

Mr. MEEHAN. My time has expired. 

Mr. Chairman, thank you. I yield back. 

Mr. RIBBLE. Mr. DeFazio. 

Mr. DEFAZIO. Thank you, Mr. Chairman. 

Mr. Chairman, I found the discussion of elasticity enlightening, 

having been an economics major in college until one day I woke up 

and realized it wasn’t a science. 

And, you know, I would say that the discussion of elasticity sort 

of leads us there. I just have to follow up a little bit. I am sorry. 

But, Ms. Pinkerton, you mentioned average fares are down. Does 

that calculation include—I think the time you quoted was when 88 

percent of the passenger costs were fares. Now it is 71 percent are 

fares. Does that average include the baggage fees? 

Ms. PINKERTON. Yes, it does. Because if I hadn’t included them, 

fares would be down 15 percent. Including them, they are down 10 

percent. 

Mr. DEFAZIO. Yes. But, of course, remember, it is an average fare 

and it is not evenly distributed. Some regions and/or airports have 

seen increases. Others where there is more competition have seen 

decreases. 

Ms. PINKERTON. True. 

Mr. DEFAZIO. Now, I am trying—you know, again, as the author 

of the PFC, I am not for indiscriminate raising of fees. 

And as you know, since I am sponsoring the transparency bill 

with the chairman, I went on that because I was upset that one 

of the last budget deals just threw an additional nominal cost that 

is supposedly going to security onto passengers. 

41 

So I believe in having that full disclosure on both sides of the 

ledger, both with the airlines and with the Government fees. 

But I think here that—on PFCs, someone raised the point that, 

for the most part, airlines have not objected to the specific imposition of PFCs for many projects. Is that is correct—— 

Ms. PINKERTON. Yes. 

Mr. DEFAZIO [continuing]. For the most part? 

So, essentially, there are projects that are good that utilize PFCs. 

We had Dr. Dillingham say they haven’t been abused, which was 

why the first iteration went away and why we rebirthed them with 

a whole different set of restrictions that have been, I think, pretty 

good. 

But hearing from Mr. Reis, wouldn’t you agree that, at some 

point, an airport, which has used PFCs with support of the airlines 

to do meritorious things that improve the customer experience in 

the airline operations, may have bumped against the ceiling, may 

not have other options, and maybe you need some flexibility to go 

a little higher in those cases with the PFC? 

Ms. PINKERTON. Well, I don’t think you were here for my testimony. But we indeed support airport projects. Sea-Tac, we were 

very supportive of the international runway, the international facility. 

What we are arguing, Congressman DeFazio, is, yes, we have 

supported these PFC projects, but there is abundant funding available, whether it is AIP or bonding, in particular—— 

Mr. DEFAZIO. I read your testimony and I caught some of that, 

if I could just interrupt. But he also pointed out the limitations of 

that, and we don’t—— 

Ms. PINKERTON. But he is moving forward with the projects. 

Mr. DEFAZIO [continuing]. Live in the world of abundant theory, 

which I know is a theory out there: If we all think positive 

thoughts, it will happen. But—— 

Ms. PINKERTON. But he is moving forward with his projects. 

Mr. DEFAZIO. Right. 

Ms. PINKERTON. They are moving forward. Nothing has been—— 

Mr. DEFAZIO. But there may be cases. 

What I am getting at is the objection of the airlines to an increase in the PFC because you think it will be indiscriminately applied once it becomes available across the industry; and, therefore, 

virtually everybody is going to raise their fee and they are going 

to do discretionary things that they could have done with other 

money, or they wouldn’t have done given their limits, that don’t 

benefit passengers and operations. Is that the concern? 

Ms. PINKERTON. No. The objection is that passengers are already 

paying too much and there is—— 

Mr. DEFAZIO. But ‘‘too much’’ is the whole experience—— 

Ms. PINKERTON [continuing]. $6 billion in a slush fund available. 

Mr. DEFAZIO [continuing]. The whole ball of wax. 

Ms. PINKERTON. So you have other ways of doing it. The PFC is 

not the sole source. 

Mr. DEFAZIO. But if there are cases where there isn’t another 

way to do it and we need to discuss—— 

Ms. PINKERTON. But there are—— 

42 

Mr. DEFAZIO. Now, Ms. Pinkerton, please, you know the procedures here. And I am being very nice to you. So you have got to 

not be quite so argumentative. 

We are talking about total costs, total burden, on the consumers. 

And if we add a dollar for baggage, that is a buck more. If we add 

a dollar for PFC, it is a buck more. 

I could argue that, if I added a dollar for PFC that got me out 

of some incredibly congested, problematic security area in some airport, my passenger experience is much more enhanced than paying 

an extra dollar—well, I don’t pay it because of my frequent flyer 

status, and I never check bags except twice a year, maybe, but people who have to pay the extra dollar. 

So, you know, it is coming out of their pocket one way or another. 

The same elasticity is going to apply because it is the total cost. 

So, I guess what I am trying to get at here: Is there a way of 

just taking the existing PFC with restrictions and saying, ‘‘OK. 

Anybody can go up this much,’’ or saying, ‘‘Well, maybe we could 

add an increment’’ or, ‘‘Maybe we could index it for inflation’’ and 

they could add at least that increment? 

Is there something you could agree to that might be beneficial to 

operations and passengers that might otherwise not happen without that flexibility or do you just think there is always going to be 

another way to pay for these things? 

Ms. PINKERTON. There has always been another way. 

Mr. DEFAZIO. OK. Forget that. 

Ms. PINKERTON. All projects are being funded. 

Mr. DEFAZIO. Mr. Hauptli, would you respond to that. 

Mr. HAUPTLI. Yes. Mr. DeFazio, we disagree on that. 

Mr. DEFAZIO. OK. Well, good. But could you expand briefly. 

Mr. HAUPTLI. You used the example of a $1 here or a $1 there. 

Would that it would only be that much. In the case of a bag fee, 

the total experience, $25—— 

Mr. DEFAZIO. No. I just meant increases. I was talking about increases. 

Mr. HAUPTLI. All right. So, no, I think we have—as Mr. Reis 

pointed out, there are limitations in our ability to do what we need 

to do. There is an infrastructure investment gap that exists today 

that is incontrovertible. 

And I think it is highly unlikely—as much as this committee 

would like to authorize funding levels at dramatically increased 

levels from where we are today, that seems very unlikely, given the 

budget environment we are in. 

So I believe and I think airports across the country believe that 

the best way of providing the necessary infrastructure investment 

is the self-help of allowing airports to impose a higher fee locally. 

Mr. DEFAZIO. Mr. Chair, if I could. I know I am over time. 

I just want to say—and, again, I used it briefly at the beginning. 

There is another issue which is an equity issue. It first came up 

where I live in Springfield, Oregon. 

Eugene, Oregon, was going to build a new airport and they were 

going to bond it and all the taxpayers in Eugene were going to pay 

for it. And I said, ‘‘Well, I use the airport more than anybody in 

Eugene. That is not fair.’’ That was part of the genesis. 

43 

And the other was an interstate issue, which is Portland airport 

serves Vancouver, Washington, and those people don’t pay any 

taxes in the State of Oregon and I felt it was fair to be able to put 

some of the costs on them. 

I think everyone agreed the program has worked. I think we disagree over whether there are other options and whether it is adequate for the future and whether there are ways we could massage 

it. And I would love to continue that discussion in a more productive way than we can here. 

Thank you, Mr. Chairman. 

Mr. RIBBLE. Thank you. Chairman Shuster. 

Mr. SHUSTER. Thank you, Mr. Ribble. And thank the panel for 

being here. 

Sorry, I have been in and out, so I didn’t hear much of what you 

said; but certainly if I ask a question or repeat myself, I hope you 

will bear with me. 

I think this issue is obviously a tough issue. We have got, you 

know, airports got to keep doing things to make sure they are staying fresh and the customers are coming and are going to take care 

of them. You have got an airline industry that is just now starting 

to make profits for the first time in years; and when you look at 

the last 30 years, I think it is fair to say you haven’t made any 

money and that is difficult. 

So when I started with my opening statement before I asked a 

question, doing something different at the FAA, trying to figure out 

how we can get an airline industry, and I think they have finally, 

someone argued they have downsized too far. I think they have 

right-sized; and I think we are going to see an industry that is 

profitable, and you know, when you look around at the transportation industry, what the railroads have done over the years, and 

it is different; but it is still, there is a profitable industry that is 

paying for its own infrastructure, not relying on the Federal Government. I don’t know that that is ever going to be possible, but 

it is reducing relying on the Government for paying for its infrastructure which I think should be the goal. 

When we again talk about PFCs, Mr. Reis, if you were to increase your PFCs, what kind of projects are you going to be able 

to move forward with? I know you are doing some projects now. 

What will you be able to move forward with, what types of things? 

Mr. REIS. Well, we have a $2 billion and a $2.5 billion program. 

We anticipate having to borrow $1.5 billion to $2 billion of that 

$2.5 billion. So we have got reconstruction of two 45-year-old concourses that have effectively not been touched in most of that period of time. We have a new international arrivals facility, reconstruction of one of our three runways that will be a $100 million 

project. You don’t think about little things like vertical circulation. 

Mr. SHUSTER. What was that? 

Mr. REIS. Vertical circulation. It is a fancy word for elevators and 

escalators. We have about 60 escalators. Many of them are 50 

years old. So as an airport expands, the airport was last completely 

redone in 1973, at which point there were 5 million passengers and 

an anticipation of 25 million passengers. We are now at 35 million. 

So we have got everything from infrastructure no one will ever see, 

44 

electrical systems, all the way through brand new international arrivals facility and sort of everything in between. 

Mr. SHUSTER. Let me ask you the converse of that. What aren’t 

you doing because you don’t have the funding? 

Mr. REIS. This is a plan, and the question is how do we fund it. 

Now, we are very lucky, unlike many of our colleagues, both large 

airports and especially small airports, in that our airline agreement, the contract we have with our airline partners, does not provide the airlines a veto over our decisions. Many of my colleagues 

do not have that luxury. 

So when you talk about the PFC as a funding mechanism, in 

many ways what we are really talking about is control. Will the 

local governing body, because they have adequate PFC resources, 

be able to make the decisions for what is good for their community 

and their airport, or will the airlines be able to veto the desires of 

the local community. 

The PFC, because it is locally imposed, locally decided upon, provides local governing bodies whether it be a city council or an authority board like ours, the ability to make those decisions. If it is, 

the PFC is inadequate, and the only option is to have the airlines 

pay for those costs, pay that debt service, then in many instances, 

the airlines have the ability to say, no, community, we don’t agree 

with your priorities, you can’t make that investment. That happened to us recently on a cargo project. The airlines voted it down. 

Now, luckily all we had to do is wait 6 months and do it; but in 

many communities they would not be able to do it because the airlines vetoed it. 

So in many ways a PFC increase, so that it stays up with inflation, is a way to let local communities make decisions about what 

is good for their airport as opposed to letting the airlines dictate 

it. 

Mr. SHUSTER. Mr. Hauptli, on that question, the broader airport 

association, what projects aren’t getting done. It sounds like SeaTac is doing a lot. Can you talk about other places in the country 

that we are not seeing it happen? 

Mr. HAUPTLI. Sure. Just let me just circle back very quickly to 

a point that you just made a couple of moments ago about the reliance on Federal funding. What we are asking for is exactly that. 

We are asking to be less reliant on the Federal Government. We 

are asking for the self help to let us get out of the Federal Government controlling these decisions. That is the beauty of the passenger facility charge. In a constrained Federal budget environment that we are in today, this allows for the needed infrastructure 

investment without the reliance on Federal funding. 

On the issue that you raise, Mr. Chairman, an example would be 

in the city of Chicago, where up to a point the city of Chicago and 

the airlines have negotiated what they mutually agree is necessary 

to be built for that airport. However, there remains other parts of 

that modernization program that the airlines don’t agree need to 

be funded and the city of Chicago has baked into their financing 

plans an increase in the passenger facility charge in order to complete that project. 

Again, a difference of opinion about what the need is, what the 

scope is, how far into the future you should look, a legitimate disVerDate Aug 31 2005 14:17 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\AV\6-18-1~1\88353.TXT JEAN
45 

agreement of opinion, but an example where the community is 

looking out further out into the future than the carriers that are 

currently operating at that facility are looking. 

Mr. SHUSTER. Right. What about places like Pittsburgh and Kansas City, and I guess Cleveland now has been what they call 

dehubbed? 

Mr. HAUPTLI. I don’t have examples for you, from those, Mr. 

Chairman. 

Mr. SHUSTER. Ms. Pinkerton, it appears from the forecasting we 

are going to have lots more people, and we are also going to have 

a lot more people in this country. In the next 20 years we are going 

to have over close to 400 million people. If we continue to see that 

kind of additional funds building infrastructure, where do they 

come from? What are your thoughts on that? 

Ms. PINKERTON. So, first of all, I think what you have heard from 

me is violent agreement, that airlines and airports need to work together on needed infrastructure, and we have demonstrated that 

we are willing to do that and we will continue to do that. The disagreement comes in how we do that; and the case I am making is 

that there are record revenues in PFCs; there are AIP fundings; 

there is record airline rents, and there is record private funding. 

There is a $6 billion uncommitted balance in the aviation trust 

fund, something very different than what you are facing in the 

Highway Trust Fund. 

And so we are not arguing that things don’t need to be built. 

They do, and we agree with that. We just don’t think you need to 

tax passengers to build those projects. We think bond funding is 

available. All of the projects that Mr. Reis talked about, they are 

going forward. They are moving forward. 

Mr. SHUSTER. And when they are bond funded or financed, airlines are paying that in the rent factor? 

Ms. PINKERTON. Exactly. We have made a policy decision. We 

would rather pay for it in our rents and fees than seeing passengers taxed, especially when there is a $6 billion uncommitted 

balance in the trust fund. 

Mr. SHUSTER. Right. And then finally, Mr. Baker, I understand 

this is your first time before the committee. Welcome. I know you 

are ably staffed back there. Your team, you have got a good team 

that know a thing or two about this committee. 

Mr. Ribble asked a question, and you may have answered and I 

may have missed it, of the various different costs for the general 

aviation community. Really the cost I am looking for is what do you 

pay to land or take off, whatever they pay? I know it is different 

in other places, but can you give me a sense of what a general aviation operator is paying in taking off and landing fees. 

Mr. BAKER. It is all over the map. This past weekend, I was in 

Ocean City, Maryland, and it was $40 to land my little airplane 

there, and another $40 to park it overnight for that facility, for 

one-time use. It is a great facility. It is well used. It is a great way 

to see the Jersey shore. 

I have travelled through your great State and used reliever airports around Pittsburgh a number of times; and certainly Appleton 

and other places are great airports you can use. It is up to the discretion of each individual airport. In some cases you really don’t 

46 

know until you get there how much they are going to charge you 

for their service fee. Some cases are waived, if you buy fuel. In 

other cases there is an overnight fee for parking your aircraft outside. 

For the most part, they are reasonable and you have the choice 

once you have gained that knowledge if you want to use that airport or a different airport that may have a lower cost. And we see 

the fuel tax as a primary way we pay our part of our deal. 

Mr. SHUSTER. What do they range? You said they are all over the map. What are they from $20 to, I mean, a place like Teterboro, 

would you pay a high fee to have to land there? 

Mr. BAKER. Oh, yeah. As an example, if you go into Boston, you 

will pay $300 to $400 to land at Logan. If you go into Appleton, 

it is free at the moment. So it is all over the map. 

Mr. SHUSTER. OK. All right. Again, I appreciate you being here 

today. I appreciate all of you being here today, and hopefully you 

are all going to go to Tarkio, which is the center of the world for 

GA, in July. I think you are going to be there, Mr. Baker. I encourage everyone to check it out. I have to say that commercial for Mr. 

Graves. It is his air show, or not his air show, but he is very involved in it. 

Again, I appreciate all of you being here, and again I think we 

have had all of you, Mr. Reis and I know Mr. Hauptli; and, Sharon, 

somebody from your organization has been to one of our listening 

sessions and I don’t know if we have had the GA. No, we are going 

to do the GA community listening session out in Tarkio. 

But it is important that we figure a way forward. I know these 

issues, funding is always a struggle, but making sure that we have 

an airline industry, an aviation industry, that is strong and viable 

because I think from all corners of the globe we are under attack, 

whether it is the mideastern air carriers or the manufacturers who 

are producing parts and aircraft for the GA community, if we don’t 

have an FAA that functions more efficiently than it does today, we 

are going to slowly start to see our number one status in the world 

deteriorate; and that is something that I think all Americans 

should pay attention to and not let happen. 

So again, I appreciate you all being here today. I appreciate the 

exchange of information, ideas, and opinions, and we look forward 

to continuing working with you. Thank you. 

Mr. MEADOWS [presiding]. And the Chair thanks the chairman of 

the full committee for his insightful questions and really in illuminating that. The Chair would recognize itself for a couple of very 

brief questions. 

Mr. Reis, AIP funding has been talked about today. Are there different restrictions on that funding based on the size of the airport? 

Mr. REIS. Mr. Chairman, I am not sure there are differentiations 

between size, although I will not claim to be an expert on that 

field. For small airports, very small airports, GA airports get a certain dollar amount every year as an entitlement, unlike larger airports which get it as a percentage of the total amount available. 

There is a fixed amount, and they can use it with a great deal of 

discretion at the very small end. 

But once you get into the commercial service airport, certainly 

small, medium and large, I think we all have to live by the same 

47 

rules. The key thing is really competition for the discretionary dollars. The FAA does a very good job of looking at the amount of 

money that is available on a discretionary basis and saying what 

is going to make the greatest contribution to the objectives that 

Congress might have put into statute or that the FAA has put into 

their own guidance; and the projects, no matter which airport it is, 

that are going to make the greatest contribution to the benefit of 

the overall system are going to end up competing better than another project that might be technically qualified but may not make 

as great a contribution to the system. 

Mr. MEADOWS. But wouldn’t that inherently disadvantage smaller, more rural airports, because if you do that then based on traffic 

flow and everything else, all the Federal dollars will go to the 

major cities, and it will continue to do that. Is there not a better 

way to give greater flexibility to smaller rural, and I just happen 

to represent a small rural airport is why I would ask? 

Mr. REIS. Right. Well, in round numbers, and again I am not a 

real expert on this really complex system; but of the $3.3 billion 

program, about $3.1 billion is actually made available to airports 

or some other stuff that is done off the top and of the $3.1 billion 

or so, somewhere in the $3 to $700 million range is discretionary 

money. The rest of it is allocated on an apportionment or an entitlement basis, and so an airport is going to get a certain amount 

of money based on their size. But you are absolutely right. 

In terms of the discretionary amount, whatever that might be in 

any given year, a large airport has a much better chance of making 

the case that its project is making a contribution to the overall system for that discretionary amount than a smaller airport would. 

That is one of the reasons why we as large airports who can take 

the greatest advantage of a PFC increase because we have a lot of 

enplanements and thus more PFCs, recognize that we have to see 

in the future that the AIP really needs to be preserved for the 

smaller airports and that if a PFC is adequately sized, I think you 

will find that most if not all very large airports are going to recognize that a decrease in AIP for large airports is part of the benefit 

to the overall system. 

Mr. MEADOWS. I will go ahead and yield to Mr. Larsen so he can 

do a followup question. 

Mr. LARSEN. Different issue actually. I am trying to understand, 

Ms. Pinkerton, your comments about the unobligated balance in 

the trust fund of $6 billion or so. 

Much like other unobligated balances in accounts in the Federal 

Government, administrations current and past use those to mask 

the size of the actual deficit not allowing the full spend-down of 

those dollars. For instance, we had a problem with the Harbor 

Maintenance Trust Fund recently, and we fixed that through the 

WRDA bill, Water Resources Development Act that says we are 

going to start spending down unobligated balances because there 

are limits on doing that, limited by what we have actually authorized. 

So I am curious about this unobligated balance in the trust fund, 

is it not limited by what we have actually authorized to be spent, 

and therefore it is not really yet accessible to be spent down? 

48 

Ms. PINKERTON. No. I believe the reason we have seen an increase in the balance is in the last reauthorization bill, you did 

change the way the money is spent out; so I suppose in a way the 

answer is yes. 

The money is spent based partially on a forecast of what is going 

to come in versus what does come in. So I think what has happened is we have had, again, record amounts of money coming in 

that weren’t anticipated, and thus the balance is built up. 

Mr. LARSEN. And therefore not able to be spent out as a result? 

Ms. PINKERTON. Right. 

Mr. LARSEN. So we would have to? 

Ms. PINKERTON. Change that. 

Mr. LARSEN. Change that in order for those dollars to be accessible? 

Ms. PINKERTON. The formula, correct. 

Mr. LARSEN. It is not a matter of saying it is sitting there; why 

aren’t airports using it? The answer is they can’t? 

Ms. PINKERTON. Correct. It is a policy decision written in the bill. 

Mr. REIS. I just want to make sure that we recognize that this 

is the Airport and Airway Trust Fund. It is not all designed for 

AIP. The Congress is facing a very large bill for NextGen, and the 

F and E, the facilities and equipment budget, comes out of that as 

well. So I would not imagine that it is all going to be available to 

airports. 

Mr. LARSEN. Right. Right. Sure. I got it. Thank you. 

Mr. MEADOWS. Thank you. One followup question, Mr. Reis, 

when you talked in April at a hearing, you talked about small and 

rural communities and the cost per enplanement and talked about 

the relationship, I guess, between the cost per enplanement and air 

service and different financing options. 

How would those financing options actually lower an airport’s 

cost of enplanement? And that is a followup to your April testimony. 

Mr. REIS. Right. Well, for small airports, they have many fewer 

options to finance than large airports do. 

Mr. MEADOWS. So it really wouldn’t lower the cost? 

Mr. REIS. I don’t know that an increased PFC for an airport that 

does not have very many enplanements is not going to generate a 

lot of money. 

Mr. MEADOWS. So the financing option is for the bigger airports. 

Mr. REIS. I think that is correct. A smaller airport has got very 

few options. 

Mr. MEADOWS. If there are no further questions, I want to thank 

the witnesses for your testimony, the Members obviously for their 

participation; and this subcommittee stands adjourned. 

[Whereupon, at 12:40 p.m., the subcommittee was adjourned.] 

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