May 5, 2015 «AddressBlck» «GreetingLine» The FAA Reauthrizatin bill is at a critical juncture. It is vitally imprtant that ur Iwa Cngressinal delegatin understands the imprtance f this legislatin t Des Mines Internatinal Airprt s prpsed new $400 millin terminal prject. Yu may have already written a letter f supprt. If s, thank yu! If yu have nt, please d s and encurage yur assciates, emplyees, and friends t d the same. Cngress is currently debating FAA Reauthrizatin funding. An effrt is underway t increase Passenger Facility Charge (PFC) user fees t $8.50, up frm $4.50. This increase will be ne f the mst imprtant elements in the financing f the terminal prject. Each enplaned passenger thrugh U.S. airprts is assessed at a $4.50 PFC user fee which is included in the ticket price. These PFC s cme back t the individual airprts fr use in capital imprvement prjects terminals, runways, etc. Des Mines Internatinal Airprt currently experiences apprximately 1.2 millin passenger enplanements. An increase f $4.00 in the PFC user fee will generate an additinal $4.8 millin annually that may be applied tward the cst f a new terminal. While nt a ttal slutin, this may be the single mst imprtant initiative t help clse the new terminal funding gap. Thank yu fr yur help. Sincerely, Kevin J. Fley Executive Directr David J. Fisher Cnsultant Attachments: Sample letter and addresses f Iwa s cngressinal delegatin Airprts United Airprt Financing Pririties in 2015 Des Mines Airprt Authrity, 5800 Fleur Drive, Rm # 207, Des Mines, IA 50321; T 515-256-5100; F 515-256-5025; www.dsmairprt.cm
Sample Letter Date Dear Senatr/Representative : I am writing in supprt f the pending mdernizatin f the FAA Reauthrizatin bill. Discussin n this bill includes a $4.00 increase in the cap impsed n the Passenger Facility Charge (PFC) user fee t a ttal f $8.50 per enplaned passenger. T the Des Mines Internatinal Airprt this is vitally imprtant t help fund its prpsed $400 millin terminal prject. It equates t $4.8 millin per year in funding that will help fund a large prtin f the necessary bnds fr the prpsed terminal. America's airprts are a fundamental cmpnent f ur natin's transprtatin infrastructure, annually welcming mre than 700 millin passengers and prcessing rughly 27 millin metric tns f carg. Cllectively, airprts make a tremendus cntributin t U.S. GDP -- mre than $1.1 trillin -- and emply mre than 1.1 millin peple. T meet the capacity demands f the future with safe, efficient, and mdern facilities that passengers and carg shippers expect, we need t make the investments t maintain and mdernize ur natin's infrastructure. Cngressinal reauthrizatin f the Federal Aviatin Administratin (FAA) in 2015 prvides us the pprtunity t d just that by mdernizing the lcally-set but federally-capped passenger facility charge (PFC) user fee paid by passengers wh use the airprt. The PFC user fee has nt been adjusted since the year 2000. As a result f significant cnstructin cst inflatin ver the past decade and a half, the current $4.50 PFC user fee has lst apprximately half f its purchasing pwer. Mdernizing the PFC by adjusting it t $8.50 and indexing it t keep up with inflatin will prvide airprts the self-help they need t make critical infrastructure and safety imprvements within their terminal buildings and n their runways. Such is the case with Des Mines Internatinal Airprt. The prpsed new terminal replaces ur 1948 terminal and prvides fr future grwth that ur current terminal cannt handle. I hpe I can cunt n yur strng supprt f this legislatin FAA Reauthrizatin bill. Thank yu, Signature (If yu wuld like an electrnic cpy f this letter, e-mail Tara Ely at Taely@dsmairprt.cm)
Addresses fr Iwa s Senatrs and Representatives U.S. Senatrs: Charles Grassley 135 Hart Senate Office Building Washingtn, DC 20510 Jni Ernst 825 B & C Hart Senate Office Building Washingtn, DC 20510 Representatives: Rd Blum, District 1 213 Cannn Huse Office Building Washingtn, DC 20510 Dave Lebsack, District 2 1527 Lngwrth Huse Office Building Washingtn, DC 20510 David Yung, District 3 515 Cannn Huse Office Building Washingtn, DC 20510 Steve King, District 4 2210 Rayburn Huse Office Building Washingtn, DC 20510
Myths and Facts As f March 2, 2015 Myth: The Passenger Facility Charge (PFC) is a tax levied n passengers. Fact: PFCs are lcally-cllected user fees paid by passengers when they use airprt facilities t help defray the csts f building airprt infrastructure. Thus, PFCs are a classic user fee paid nly by thse wh use the airprt and spent nly n prjects at that airprt. While Cngress has set a PFC cap, the federal gvernment des nt cllect PFCs, nr des the federal gvernment spend PFC dllars. As such, PFCs represent the passenger s direct investment in airprt infrastructure. The highly-respected and nn-partisan Cngressinal Research Service agrees. In a January 2015 reprt, CRS accurately describes the PFC as a state, lcal, r prt authrity fee, nt a federally impsed tax depsited int the Treasury. Myth: If Cngress updates the PFC cap, demand fr travel will g dwn. Fact: Mdernizing the PFC t restre its purchasing pwer wuld nt have a significant impact n demand as the airlines claim. At a time when the airlines are charging passengers $25 t check a bag and $200 t change their tickets, the argument that a mdest $4 adjustment in the PFC cap wuld smehw dramatically impact demand desn t hld up. In fact, since 2009, airfares have increased mre than 23 percent. Revenue frm bag fees and ther ancillary fees have als increased dramatically in recent years. But rather than ging dwn, enplanements have actually increased. Myth: Because f their sterling credit ratings, airprts can simply fund all necessary prjects thrugh bnd financing. Fact: Airprts are incredibly prud f their financial prudence and strng credit ratings. Hwever, many airprts are unable t g t the bnd market r issue new bnds t finance their capital prjects. Many airprts have reached the limits f their debt capacity and either cannt finance new prjects r have had t phase-in their prjects ver a lnger timeframe, increasing the csts and delaying the benefits fr passengers. Bnds are nt a revenue surce, but simply a financing mechanism that must be repaid. Airprts must have a surce f revenues t pay back bnds, and PFCs are a very imprtant surce f revenues fr airprts t d s. Myth: Airprts have ample resurces such as unrestricted cash reserves t fund needed imprvement prjects Fact: Like many Americans and businesses arund the cuntry, airprts wisely put aside cash reserves in a cntingency fund in case f an emergency. Such reserve funds help airprts be prepared t cver lss f revenue when a carrier terminates service r declares bankruptcy. And cash reserves are ften required r encuraged by bnd rating agencies. Cmplying with the rating agencies guidance n reserves helps airprts maintain their strng credit ratings and preserve access t lwer interest rates, which benefit airlines and travelers.
Reserves that are required by financing agreements cannt simply be spent r the airprt lses the financing benefits f having the reserves. These reserves have helped keep financing csts dwn n the almst $84 billin in airprt debt that FAA reprted fr 2012. Myth: Airlines have invested and will invest in all necessary airprt infrastructure imprvements. Fact: In sme instances, airlines d directly invest in infrastructure, but incumbent carriers tend t supprt thse infrastructure prjects that they believe will advance their wn interests, such as expansin f facilities t facilitate their wn peratins. Often times they are nt as eager t supprt prjects that benefit their cmpetitrs r bring in new cmpetitin. Yet frm the airprt, cmmunity, and air passenger perspectives, such investments are imprtant because they help reduce r hld dwn airfares and prvide mre alternatives fr air travelers. Myth: The current Passenger Facility Charge (PFC) prvides airprts with all the resurces they need t make needed infrastructure upgrades. Fact: In 2013, airprts cllected $2.8 billin in PFC revenue. Accrding t ACI-NA s latest Capital Needs Survey, airprts f all sizes need mre than $15.1 billin annually in infrastructure imprvements t fix aging runways and terminals, relieve cngestin and delays, and spur new airline cmpetitin. That s up frm ACI-NA s previus estimate, and it s far mre than the $6.2 billin that airprts received frm bth PFCs and AIP last year. What s mre, the purchasing pwer f the PFC has declined ver the years due t inflatin in cnstructin csts. In rder simply t restre the PFC t the same purchasing pwer f a $4.50 PFC in 2000, it is necessary t mdernize the PFC cap t $8.50 tday. Of curse, this wuld nly allw PFCs t catch up with cnstructin cst inflatin that has already ccurred. Ging frward, the cap needs t be autmatically adjusted peridically t prevent further ersin f PFCs. Mdernizing the PFC cap is a gd, fiscally-respnsible way t ensure that airprts have the resurces they need t increase capacity, prmte cmpetitin, and enhance safety withut burdening the federal budget. Myth: The Airprt and Airway Trust Fund (AATF) has $4.7 billin in uncmmitted funds that can be used t pay fr airprt imprvement prjects. Fact: The uncmmitted balanced helps maintain the liquidity f the trust fund. If the gvernment were t spend the uncmmitted balance, it wuld bankrupt the AATF, essentially turning it int anther highway trust fund. Mrever, the AATF is used fr much mre than just airprt infrastructure prjects. The AATF funds a hst f ther mdernizatin initiatives like NextGen, as well a majrity f FAA peratinal csts. Unfrtunately, a healthy uncmmitted balance in the AATF desn t mean that AIP funding is autmatically secure r that federal grants and revenue frm an utdated PFC cap are enugh t cver airprt capital needs. Despite an increasing Trust Fund balance, AIP funding has been reduced frm $3.515 billin in FY11 t $3.35 billin in FY15 abut a 5 percent cut. Mrever, rising cnstructin csts have chipped away at the purchasing pwer f bth AIP funding and the $4.50 PFC. T make matters wrse, Cngress diverted $253 millin in AIP funds t pay fr FAA peratins during the first rund f sequestratin in 2013. With sequestratin slated t last thrugh 2021, airprts may very well experience additinal and ptentially deeper AIP cuts in the years ahead.
AIP is an imprtant surce f funding fr airprt infrastructure prjects. It s unlikely that Cngress will increase AIP federal funding fr airprts even if there happens t be a high uncmmitted balance in the Trust Fund. Cnsidering the dwnward pressure n federal funding and rising airprt capital needs, it is nw mre imprtant than ever that Cngress mdernize the PFC cap t $8.50 and prvide airprts with the self-help they need t finance a greater share f infrastructure prjects with lcal revenues. Myth: U.S. airlines are still carrying fewer passengers r perating fewer flights than they did in 2007. Fact: We expect 2014 enplanements t meet r exceed pre-recessin traffic levels. Air carriers may be perating fewer aircraft thrugh intense capacity discipline. Hwever, the fact that airlines are ften using larger aircraft and are achieving higher lad factrs than in previus years means that airprt facilities are being stressed by cncentrated numbers f passengers. Therefre, terminals ften need t be expanded r rehabilitated, and airfield facilities need t be updated and recnstructed t maintain safety. Mdernizing the PFC cap will prvide airprts with the resurces they need t finance increasing capital needs.
AIRPORT FINANCING PRIORITIES IN 2015 America s airprts are pwerful ecnmic engines, generating mre than $1.1 trillin in annual activity and supprting mre than 9.6 millin jbs. Mdernizing the Passenger Facility Charge (PFC) user fee and maintaining the Airprt Imprvement Prgram (AIP) are the best ptins fr strengthening ur natin s airprt system t meet the needs f tday and the challenges f tmrrw. Strengthen Lcal Cntrl Over Lcal Investment Decisins It is time t get Washingtn ut f the way f lcal airprt investment decisins by mdernizing the PFC cap t $8.50 and indexing it fr inflatin. At n cst t the federal gvernment, this wuld restre the PFC s lst purchasing pwer and prvide airprts with the ability t set their wn levels based n lcally-determined needs t ensure the cntinued safety, security, and mdernizatin f their facilities. At a time when there is munting pressure t reduce federal spending, mdernizing the federal gvernment s PFC cap is the mst free-market ptin t prvide airprts with the lcally cntrlled selfhelp they need t finance vital infrastructure prjects. As imprtant ecnmic drivers in their lcal cmmunities, airprts need a mdernized PFC t upgrade their facilities and attract new air service. Airprt Investment Prmtes Cmpetitin New investments in airprts can be valuable tls in helping lcal cmmunities attract new air carriers, which increases cmpetitin and leads t lwer fares fr passengers. Airprts many f which are tapped ut n their ability t bnd in a financially respnsible manner need additinal resurces t build the terminals, gates, and ramps necessary t attract new air carriers and entice existing nes t expand service. The traveling public gets mre chices and lwer fares when airprts can build the facilities that prvide mre airline ptins and mre service alternatives. Airprts Have Tremendus Unmet Needs Airprts f all sizes need ver $15.14 billin annually in infrastructure imprvements t mdernize aging runways and terminals, relieve cngestin and delays, and spur new airline cmpetitin far mre than the $6.2 billin that airprts received last year frm bth PFCs and AIP. The PFC cap set in Washingtn has nt kept pace with rising cnstructin csts and inflatin since it was last adjusted t $4.50 in 2000, and its purchasing pwer has erded by 50 percent. In additin, AIP has been reduced by hundreds f millins f dllars in recent years. Many airprts even thse with sterling credit ratings have reached their debt capacity and either cannt finance new prjects r have had t phase in their prjects ver a lnger timeframe, increasing the csts and delaying the benefits fr passengers. Mdernizing the PFC and maintaining AIP funding are critical t airprts f all sizes thrughut the cuntry.