Gray: Raising airfare taxes would hurt Phoenix businesses

By Jenn Gray
Posted 1/20/20

Sky Harbor International Airport just collected $3.6 million in taxpayer money from the Federal Aviation Administration to upgrade a tarmac, while the Deer Valley Airport cashed in on a $2.7 million …

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Gray: Raising airfare taxes would hurt Phoenix businesses

Posted

Sky Harbor International Airport just collected $3.6 million in taxpayer money from the Federal Aviation Administration to upgrade a tarmac, while the Deer Valley Airport cashed in on a $2.7 million taxiway used almost exclusively by privately chartered jets and air taxis.

In the past few months, the FAA has offered 327 airports large grants to upgrade their facilities, but some members of Congress think the $495 million isn’t enough and want to nearly double the “passenger facility charge” to fund more infrastructure projects.

Right now, the tax is capped at $18 roundtrip, but airport lobbyists are fighting to increase the cap or lift it altogether. Yet we already pay a 7.5% federal excise tax on airfare, a $4 federal segment fee per flight leg, a $5.60 Sept. 11 security fee, and international departure and arrival fees up to $200 -- not to mention other fees charged by the airlines.

Adding more fees would increase the cost of flying into and out of Phoenix even more, hurting our tourism industry, holiday travelers, lower-income Arizonans, and small businesses -- while deterring long-term business from larger employers as well.

Airports don’t need this extra money. U.S. airports have $14.5 billion in cash reserves -- over a year’s worth of liquidity. And, they generate $30 billion in annual revenue, $7 billion of which comes from taxes and fees paid by passengers.

Sky Harbor serves 45 million passengers annually --- a figure expected to double in the next two decades. To accommodate this, the airport recently started a 20-year renovation project to move railroad tracks underground, demolish a terminal, build a new west terminal concourse, and fix up other concourses, roads, and processing facilities.

According to Phoenix’s assistant director of aviation, the airport’s revenue is sufficient to cover the renovation costs. Phoenix boasted almost $340 million in cash and investments, plus an additional $510 million in revenue in 2017, so we don’t need to nickel-and-dime passengers for any more pet projects.

Even if airport executives did need a lump sum of cash for repairs or upgrades, they could always borrow the money against their future revenues. Airports are investment-grade entities with strong credit ratings, which means they can easily borrow at low rates.

Last year, Phoenix boasted the second-fastest rate of job growth in the country --- but hiking airfare taxes could discourage startups and businesses from locating here. As a frequent flyer small business owner myself, more fees means fewer flights to serve and pursue out-of-state clients.

Consider the 11,000 employees at Intel’s two satellite offices in Chandler, the city’s largest employer. If a quarter of them travel quarterly to HQ or otherwise --- and the passenger facility fee nearly doubles, as some lawmakers suggest -- that’s multiple six figures worth of fewer jobs and lower salaries.

Compound that across Arizona’s entire economy, and the result is depressing, to say the least. Arizona airports are thriving, and flying is already expensive enough. There’s no need to punish passengers with more taxes and fees. Let’s hope our lawmakers in D.C. realize that before it’s too late.

Editor’s note: Ms. Gray relocated her family and small business from California to Chandler in 2014. She’s since served as a sales and marketing consultant to dozens of start-ups and non-profit organizations throughout the country.

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