Op-Ed: CVG CEO Thanks Massie for Airport PFC Legislation
Airports are complex businesses that have profound impacts on the economic vitality of communities. Airports are also job, revenue and tax generators for their local communities. CVG is no different. Based on a study by NKU and the University of Cincinnati commissioned in 2016, CVG has a $4.4 billion economic impact on our region. While there are myriad reasons our airport is booming, one of the key factors is that the airport board and management are working together “at the speed of business” to make sound business and fiscal decisions. We are acting locally, thoughtfully and quickly to move our business forward.
Congressman Thomas Massie appreciates the value of airports and has recently introduced legislation that will assist airports throughout the United States in addressing critical infrastructure needs in a more timely and business-oriented manner based on the capital needs of that particular airport. My airport colleagues and I thank Congressman Massie for his thoughtful legislation to help airports raise more money for capital projects that will modernize outdated terminal facilities, increase competition, and create new jobs at our airports.
In recent years, and thanks to our community, CVG has experienced tremendous success that has made us one of the fastest-growing airports in the country. Last year alone, the airport served 8.9 million passengers, representing an increase of more than a million additional passengers compared to 2017. Further, CVG’s local passenger volumes in 2018 set new records eight months in a row, growing nearly 14% over 2017. Overall, the volume of local passengers using CVG has increased by 92% in the last five years.
This increased demand is great news for the Cincinnati region. More travelers mean more tourism and more business for local companies. Increased travel helps grow our local economy. It also means, however, that the airport is in need of renovations due to increased wear and tear. One of the financing tools that airports rely on to fund infrastructure projects is the Passenger Facility Charge (PFC). The PFC is federally capped at a maximum of $4.50. It hasn’t been updated in nearly 20 years, making it ineffective and inadequate to serve 21st century airports.
In an effort to address the significant funding shortfall faced by CVG and all of America’s airports, Congressman Massie has introduced legislation to allow airports to establish a PFC at the rate needed by each airport based on its capital needs. This free market solution would go a long way toward improving our airports.
It’s important to understand that the PFC is a user fee paid only by travelers using the airport. It won’t cost a dime of taxpayer dollars, and, in fact, it saves them from footing the bill by only charging those who use the airport.
By allowing the PFC to be set locally based on the fiscal needs of an airport, in consultation with and approval by its regulating body, Congressman Massie’s bill will allow airports to make their own financial and long-term planning decisions. Airports could prioritize the most important infrastructure projects that will go the furthest to help travelers. Airports could generate capital funding without being beholden to airlines. Rates would be set locally, based on locally-identified infrastructure needs.
At CVG, for instance, much of our terminal infrastructure that our passengers rely on every day—like our baggage system—was designed and built for a connecting passenger base. In January 2021, CVG will be responsible for maintaining and building new assets to serve the growing demands of our passengers, 90%+ of whom are local residents, in a multi-carrier environment. Hundreds of millions are needed to keep pace with our growth, and a locally established PFC could help us meet our capital needs to serve our passengers more quickly and efficiently.
Better airport infrastructure throughout the United States will also create competition among airlines who use the nation’s airports. As we have seen over the last several years at CVG, increased competition and new air service will create lower ticket prices for passengers, making it more affordable for all of us to travel.
Congressman Massie has been a champion for CVG and airports across the country. His legislation will go a long way toward helping upgrade our nation’s airport infrastructure, lower ticket prices, and create better travel experiences. We applaud Congressman Massie for his efforts and urge his colleagues in Congress to support him to modernize the PFC.
Candace McGraw is the chief executive officer of the Cincinnati/Northern Kentucky International Airport (CVG)