Modernizing the Passenger Facility Charge:The Key to Transforming America’s AirportsFor a Competitive 21stCenturyMarch 2015About AirportsUnitedAirportsUnited is a collaborative effort between Airports Council International – North America (ACI-NA) and theAmerican Association of Airport Executives (AAAE) advocating for federal policies that strengthen our nation’s aviationinfrastructure to meet the needs of today and the challenges of tomorrow. Together with our growing coalition of industrypartners, AirportsUnited showcases the unity and resolve of airports across the country to enact our core policy goals,especially as we prepare for the upcoming FAA reauthorization debate in Congress. It also provides a platform for partnersin our coalition to contact members of Congress and collectively lend their voices to our effort. Airports, contractors,vendors, retail establishments, restaurants, businesses, tourism groups, municipalities, and states all have a vestedinterest in ensuring that airports remain strong economic engines and job centers for their local communities. We have agreat story to tell, and united we can share it.>>IntroductionAirports are more than gateways to travel. Airportsare gateways to economic opportunity. Just last year,America’s airports generated more than $1.1 trilliondollars in economic activity – 6.5 percent of the country’sGDP – and supported more than 9.6 million jobs. Asdemand for travel continues to climb, the sky is the limit.But our nation’s airports – and our leadership position inthe global aviation system – are at risk of falling behind.U.S. airports need new infrastructure investments tomodernize for 21st century air travel demands.This overview survey will help highlight the need fora wide variety of airport improvement projects, usingexamples gathered from airports across the United Statesthat show how currently limited financing options arepreventing airports of all sizes from moving forward withmuch-needed projects.>>“Today, we have the busiest aviationsystem in the world. Fifty millionflights and 800 million passengerstraverse our skies every year. Inthe next decade or so, our systemis expected to be moving one billionpassengers annually... As the numberof passengers grows over thecoming years, Americans stand tolose more time and money to delays.” 

# Rep. Bill Shuster (R-Pa.) Chairman House Transportation and Infrastructure Committee February 24, 2015Understanding the Scope of Airport Capital Improvement ProjectsAirport capital improvement projects are complexundertakings that involve airport, airline, aviation, andnon-aviation stakeholders. At their core, airport capitalimprovement projects are designed to add capacityfor growing passenger and cargo demand, rehabilitateaging infrastructure, comply with federal and localdesign standards, enhance the safety and security ofthe traveling public, provide opportunities for new andcompetitive air service, protect the environment, andaccommodate aircraft innovation.The successful completion of these airport improvementprojects will help increase airport operational efficiency.Such efficiencies benefit all airport stakeholders,including our airline partners, by reducing operatingexpenses. Safety and security enhancements areparamount. Additionally, airport improvement projectsprovide opportunities for airports to enhance competition,which can lead to additional service options and lowerairfares.Airports’ vision is to connect local communities withglobal destinations, enabling travelers to spend time withtheir families and grow their businesses. The key to oursuccess is investing in airport infrastructure. Without thecompletion of needed airport improvement projects, U.S.aviation leadership will be diminished and we will lose ourstatus as a business and tourism destination.>>Understanding the Financing ChallengeAlthough the need for airport improvement projectsis clear, airports are not able to fulfill needed capitalimprovements without modernizing the way we financesuch projects.According to the latest 2015 ACI-NA Capital NeedsStudy, airport capital requirements for the next fiveyears total more than $75.7 billion. That is more than$15 billion a year in needed projects.Currently, there are several mechanisms that fundairport capital improvement projects, including AirportImprovement Program (AIP) grants and locally setPassenger Facility Charge (PFC) user fees.Airports also utilize bonds – often repaid with PFCrevenue – as a financing mechanism to facilitateairport improvement projects.It is important to note, however, that bonds are nota revenue source, and instead are simply a financingmechanism that must be repaid. As a result, manyairports – even those with strong credit ratings – havereached their debt capacity and either cannot financenew projects or have had to phase in their projectsover a longer timeframe, increasing the costs anddelaying the benefits for passengers.Understanding the Financing ChallengeIn 2013, airports collected $2.8 billion in PFC revenue.With more than $15 billion in annual capital needs,current PFC revenue only scratches the surface ofairport funding requirements. On top of that, thepurchasing power of the PFC has declined by nearlyhalf because it does not keep pace with inflation. Thishas exacerbated the airport funding challenge.When airports are not able to keep up with passengerdemands, they fall behind. The following exampleshighlight just some of the capital needs at airportsacross the country, the challenges airports face, andhow modernizing the PFC cap would help them financecrucial safety, security, and capacity projects.>>Meeting Capacity DemandsIn 2014, more than 750 million passengers traveled through U.S. airports.Over the next 20 years, the Federal Aviation Administration (FAA) estimatesenplanements will grow to more than 1.14 billion. At the same time, the FAAanticipates cargo traffic will double to more than 80 million revenue ton miles.To accommodate increased passenger and cargo demand, airports must keep aconstant eye on the future and ensure their facilities are able to accommodateincreased growth.>>More than 56 percent of capitalimprovement needs identifiedin the 2015 ACI-NA Capital NeedsStudy are to meet capacitygrowth and accommodateaircraft innovation.Examples of capacity projects Impacted because of an outdated PFC capAirport Los AngelesInternationalAirportJohn F. KennedyInternationalAirportSan FranciscoInternationalAirportSeattle-TacomaInternationalAirportDes MoinesInternationalAirportCharles M. SchultzSonoma CountyAirportIATA Code LAX JFK SFO SEA DSM STSState California New York California Washington Iowa CaliforniaHub Size Large Large Large Large Small Non-Hub‘13 Enplanements 32,425,892 25,036,358 21,704,626 16,690,295 1,078,496 112,779Need Improve terminalconnections tomove passengersthrough the airportcomplex moreefficientlyConstruct newgates to meetgrowing demandand increasecompetition;Upgrade centralpower plant tomeet capacityneeds$4.4 billion,10-year capitalplan to increasecapacity andenhance safetyand securityDraft masterplan points to a35-gate expansionto meet theincreasing demandat one of thefastest growingairports in thecountryReplace existingterminal andexpand runwayto meet growingdemandJust completeda runway safetyproject thatleaves themunable to expandtheir terminal toaccommodatemore competitionPFC ConstrainedUntil*10/1/2019 1/1/2019 10/1/2024 11/1/2028 4/1/2022 4/1/2026 

# *According to Federal Aviation Administration PFC Approved Locations list expected expiration date found at http://www.faa.gov/ airports/pfc/monthly_reports/media/airports.pdf.Reconstructing Aging InfrastructureWhile airports keep a watchful eye on passenger growth, they must also ensureexisting runways and terminal buildings are in good repair to prevent safetyproblems and service disruptions. The average airport facility in the UnitedStates is more than 40 years old, and our newest major airport is 20 years old,so many of its major facilities are coming to the end of their useful lives or needto be rehabilitated. As airport infrastructure continues to age, more and moreresources are being focused on reconstruction over new improvements.>>More than 38 percent of capitalimprovement needs identifiedin the 2015 ACI-NA Capital NeedsStudy are intended to maintainor rehabilitate existing airportfacilities to ensure goodworking order.Examples of rehabilitation projects Impacted Because of an outdated PFC capAirport DenverInternationalAirportMinneapolis-St.Paul InternationalAirportPortlandInternationalAirportSan AntonioInternationalAirportLexingtonBlue GrassAirportLubbockPreston SmithInternationalAirportIATA Code DEN MSP PDX SAT LEX LBBState Colorado Minnesota Oregon Texas Kentucky TexasHub Size Large Large Large Medium Small Small‘13 Enplanements 25,496,885 16,280,835 7,452,603 4,005,874 539,238 454,408Need Renovateterminals, improvebaggage system,rehabilitate airfieldpavement, andupgrade airfieldlighting systemReplace jetbridges andundertake relieverprojects forgreater efficiencyTerminalimprovements tomaintain efficiencyMajor runwayrehabilitationPerimeter roadrepairTerminal buildingimprovements to40-year-old facilityPFC ConstrainedUntil*2/1/2029 10/2/2018 11/1/2034 7/1/2025 2/1/2038 3/1/2020 

# *According to Federal Aviation Administration PFC Approved Locations list expected expiration date found at http://www.faa.gov/ airports/pfc/monthly_reports/media/airports.pdf.Ensuring Compliance with Design MandatesAs highly regulated facilities, airports are required to comply with myriad federal,state, and local regulations, including regulations stemming from the FederalAviation Administration (FAA) rules, American Disabilities Act (ADA) compliance,and much more. As such, airports are continually reviewing airport designstandards to ensure compliance and improve airport safety and efficiency.>>Examples of compliance projects Impacted because of an outdated PFC capAirport OaklandInternationalAirportDaytonInternationalAirportJacksonMunicipal AirportAuthorityAshevilleRegionalAirportStocktonMetropolitanAirportSiouxGatewayAirportIATA Code OAK DAY JAN AVL SCK SUXState California Ohio Mississippi North Carolina California IowaHub Size Medium Small Small Non-Hub Non-Hub Non-Hub‘13 Enplanements 4,770,716 1,244,841 595,951 342,400 71,757 25,313Need Perimeter-dikerepair to meetFEMA’s currentflood-controlstandardsRehabilitateairport terminal,which datesback to 1958, tobring the it upto modern coderequirementsrepairComplete a runwayand taxiwayimprovementproject to meetFAA standardsAirfieldredevelopmentprojectInstall an ADAcompliant elevatorRunway safetyproject andairfield lightingenhancementsPFC ConstrainedUntil*2/1/2030 4/1/2019 2/1/2031 4/1/2024 6/1/2016 7/1/2021 

# *According to Federal Aviation Administration PFC Approved Locations list expected expiration date found at http://www.faa.gov/ airports/pfc/monthly_reports/media/airports.pdf.Enhancing Safety and Security and PromotingEnvironmental ProtectionJust as aircraft technology evolves, safety and security challenges areconstantly changing, especially as threats become more complex and passengerdemand increases. Airports must continually work to ensure the safety andsecurity of the traveling public. Airports are also responsible stewards of theenvironment, including noise concerns and deicing processes during winteroperations. An airport’s ability to maintain safety, security, and environmentalchallenges promotes efficient airport operations and reduced flight delays.>>Examples of Safety, Security and Environmental projects Impacted because of an outdated PFC capAirport Norman Y. MinetaSan JoseInternationalAirportPittsburghInternationalAirportIndianapolisInternationalAirportReno-TahoeInternationalAirportGerald R. FordInternationalAirportSavannah/HiltonHead InternationalAirportIATA Code SJC PIT IND RNO GRR SAVState California Pennsylvania Indiana Nevada Michigan GeorgiaHub Size Medium Medium Medium Small Small Small‘13 Enplanements 4,315,839 3,812,460 3,535,015 1,671,926 1,123,257 798,376Need Needs higherfencing andadditionalintrusion detectiontechnologyfor enhancedperimeter securityDeferredenvironmentalimprovementprojects, includinga deicing stormwater treatmentplantImprove deicingfacilities toprotect theenvironment andimprove winteroperationsExpand Customsand BorderProtectionfacilities toaccommodateincreased demand$26 millionconsolidatedcheckpoint projectExpand TSAsecuritycheckpoint andCBP arrivals hallto meet growingdemandPFC ConstrainedUntil*5/1/2029 12/1/2024 10/1/2022 7/1/2018 6/1/2023 10/1/2017 

# *According to Federal Aviation Administration PFC Approved Locations list expected expiration date found at http://www.faa.gov/ airports/pfc/monthly_reports/media/airports.pdf.Accommodating Aircraft InnovationAirplane manufacturers play an important role in helping airlines meet globalroute planning and capacity goals through cutting-edge aircraft design andinnovation. Airport infrastructure decisions are based partly on forecastsprepared by the major airplane manufacturing companies. One major aircraftmanufacturer expects the world fleet of aircraft to more than double by 2033.When global route networks grow, especially routes connecting the UnitedStates to emerging travel markets like the Middle East, U.S. airports mustensure they are able to accommodate airplanes of all sizes and weights.>>“To meet the extra demand,airlines are adding seats tothe marketplace, in part bydeploying new and largeraircraft on many routes.” 

# John Heimlich Vice President and Chief Economist Airlines for America March 11, 2015Examples of accomodation projects Impacted because of an outdated PFC capAirport Dallas/Ft. WorthInternationalAirportNewark LibertyInternationalAirportLa GuardiaAirportSan DiegoInternationalAirportKansas CityInternationalAirportSouthwest FloridaInternationalAirportIATA Code DFW EWR LGA SAN MCI RSWState Texas New Jersey New York California Missouri FloridaHub Size Large Large Large Large Medium Medium‘13 Enplanements 29,038,128 17,546,506 13,372,269 8,878,772 4,836,221 3,788,870Need Reconstructtaxiways toaccommodatelarger aircraftAirfieldimprovementsto reduce trafficdelaysAirfieldimprovementsto reduce trafficdelaysRehabilitatea runway andrelocate a taxiwayDeferred amajor runwayreplacementand taxiwayreconstructionConstruct aparallel runwayand rehabilitatereliever runwaysPFC ConstrainedUntil*9/1/2034 7/1/2018 1/1/2019 11/1/2037 4/1/2021 1/1/2020 

# *According to Federal Aviation Administration PFC Approved Locations list expected expiration date found at http://www.faa.gov/ airports/pfc/monthly_reports/media/airports.pdf.ConclusionThe nation’s airport system is aging and at risk of falling behind. Many airportshave exhausted the financial resources available to them. As a result, someairports have delayed projects or undertaken projects using longer timeframeswhich only drives up the cost.A modernized PFC and a strong AIP will allow airports to do what they do best:serve their passengers with safe, secure, and efficient facilities, as well aseffectively planning for the future. Ultimately, the airport is in the best positionto determine of what its future will hold in terms of competition, traffic, andcapacity. Modernizing the PFC and maintaining AIP will give airports and theircommunities control how to best address their individual needs.>>Learn more about airport priorities at www.airportsunited.com >>