Take a good, hard look at the dilapidated conditions of America’s airports and then ask yourself why the high consumer costs associated with air travel can’t be parlayed into improved infrastructure. The answer to this question tells a larger story about growing conservative frustration with the Republican-controlled Congress and its unwillingness to embrace even the smallest, most incremental pro-competition, pro-growth, and pro-consumer policies that would result in lower costs and improved services.
The sad reality on Capitol Hill is that Republican lawmakers have settled upon a meek, unimaginative approach to legislative openings that now exist as part of the FAA reauthorization process. For this reason, U.S. consumers can expect to foot the bill for inefficient, costly services that pale in comparison with what is available overseas.
Just ask Vice President Joe Biden, the self-described man of the people, who prides himself on riding Amtrak trains between his home state of Delaware and Washington, D.C. It was during a speech at a Philadelphia train station in February 2014 that Biden likened the aging infrastructure at New York’s La Guardia Airport to “Third World country” conditions.
When even the political class is scandalized by sub-par services, it’s time to act. That’s what Biden and Governor Andrew Cuomo vowed to do when the vice president visited the Empire State more than a year later in July 2015. Cuomo took the opportunity to unveil a $4 billion plan to improve and modify La Guardia. Private funding would supposedly cover more than half of the costs, and whatever the private funding didn’t cover would be picked up by the Port Authority of New York and New Jersey — as in the taxpayers.
Whatever the merits or defects of Cuomo’s multi-billion-dollar initiative, only a few weeks before Biden arrived in New York, the U.S. Travel Association had released its own vision for reform. Where Biden and Cuomo seized upon large-scale, grandiose schemes, the association offered up a tightly focused, well-reasoned proposal with achievable goals. On June 2, 2015, the association officially released its plan, titled “National Aviation Policy: Pro-Competition, Pro-Growth, and Pro-Traveler.” While the plan would have translated into real savings for the traveling public, it appears that cronyism has prevailed over sound public policy. But that doesn’t mean it has to stay this way. The plan consists of three basic recommendations.
For starters, U.S. Travel called for the elimination of five airport and airway trust-fund taxes. Let’s take a look at what this tax cut would mean for your wallet and how it compares with the status quo. There’s the Domestic Passenger Ticket Tax (7.5 percent) and the tax on International Arrivals and Departures ($17.70 per passenger). There’s the tax on flights between the continental U.S. and Alaska and Hawaii ($8.90 per person). There’s the Domestic Commercial Fuel Tax (4.3 cents per gallon) and the tax on Mileage Awards (7.5 percent of value of miles). Eliminating these taxes would save each traveler between $9.50 and $25.50, based on an average round-trip airfare of $340, according to U.S. Travel. This is why we elected Republicans to Congress, right? So they would alleviate the tax burden whenever they saw a real opening — and that opportunity is calling.
The association’s proposal also addressed the sorry state of U.S. airport infrastructure. This is where the second part of the proposal comes into play. Congress should have given local airport authorities the option to recover infrastructure costs through an increase in something called the Passenger Facility Charge (PFC) from a cap of $4.50 to $8.50. The third recommendation was to enhance airline competition. The U.S. Travel Association is pushing to protect existing Open Skies Agreements and expand them to new countries. Open Skies agreements started in 1992; they precluded the government from determining which international carriers and routes could fly to and from the United States. Open Skies agreements allow the airlines market access to fly between the U.S. and the other nation.
#share#So how did the Republican Congress respond?
On the House side, the bill authored by House Transportation Committee Chairman Bill Schuster (R., Pa.) at least acknowledges the need for reform. That user fees are an active topic of discussion in the committee, for instance, is cause for encouragement. However, the current bill could be so much more than it is. The good news is that there is still an opening for an audacious move in the direction of fiscal conservatism. At this point, the bill should be modified to include the U.S. Travel Association’s tax reductions so U.S. consumers can feel the difference in their wallets when they book flights. Next, the committee should move to devolve funding for airports from the federal government to localities.
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On the Senate side, the story is less hopeful. Initially, the Senate version of the bill did include an increase in the Passenger Facility Charge. But this provision has been pulled out for reasons that are not entirely clear. As Politico reported on March 9, 2016:
Last-minute machinations continue to plague the Senate Commerce Committee’s FAA reauthorization bill release, but here’s one thing Team Transpo knows for sure: The proposed passenger facility charge increase floated last week has been dropped like a hot potato. And the U.S. Travel Association is piping mad. “The Senate was intent on advancing a balanced, bipartisan bill. As is the case in Washington, however, it’s harder to do something good than to keep something good from happening,” Jonathan Grella, U.S. Travel’s executive vice president of public affairs, told Politico. “Travelers will now have to wait until at least the 20th anniversary of the last PFC adjustment in order to reap the benefits of updated airports and restored airline competition.”
In basketball lingo, this is a wide-open, outside shot for conservatives in Congress. The policy rationale is fairly straightforward: When you cut or eliminate federal aviation taxes, you can then empower local airports with the ability to implement a user fee that can go toward rebuilding infrastructure. So what’s not to like?
But, for the moment at least, it appears the Republican leadership in Congress is determined to miss another opportunity to implement a meaningful, achievable reform that would help America’s beleaguered consumers and taxpayers.