The FAA released their traffic forecast this week. They say that traffic will begin to turn the corner this year and then trend upward at about 2.5 percent a year afterwards. I think they are right; I hope they are right – most importantly, we need to plan as if they are right.
I remember a time when FAA forecasts were routinely exceeded by actual performance. In the post-9/11 world; in the post-Great Recession world, all bets are off – if this was Las Vegas they wouldn’t even set an “over-under.”
It is worth remembering, though, what things were like right before 9/11; and what things were like right before the “Great Recession.”
Before 9/11, we were approaching three-quarters of a billion passengers. The media was cluttered with stories about delays and congestion – problems that had been festering all decade and had finally broken out into a full blown crisis. There were lengthy tarmac delays and passengers who were upset. This was about the time airlines finally discovered the importance of the air traffic control issue (sorry, couldn’t resist). There were people on Capitol Hill calling for a greater effort; indeed, the Passenger Facility Charge (PFC) user fee limit was increased in the FAA reauthorization bill, as was the Airport Improvement Program (AIP). It wasn’t going to be adequate to meet the demand, but it was a good start.
The 9/11 attacks changed a lot of the calculations and the timing, but did not change the basic fact that this nation does not have the aviation infrastructure it needs. When traffic rebounded back toward the three-quarters of a billion mark, we saw many of the same problems we saw in 1999-2000: delays, congestion and passenger service issues. ACI-NA launched the industry’s push for an increase in the PFC user fee limit to account for construction cost that had eroded half the user fee’s value since 2000; as well as for legislation to change the tax treatment of airport bonds.
The financial collapse and the recession that followed have reduced traffic, but have not changed the basic fact: our aviation infrastructure is not adequate to meet the demands our economy places upon it. We were able to get a provision into the stimulus bill providing for a two year holiday on the tax treatment of bonds, but we want to make it permanent. More importantly, we are working hard to get a new FAA reauthorization bill passed.
We estimate (and this is a conservative estimate) that the AIP provisions that are in both the House and Senate versions of this legislation will create at least 80,000 jobs in the first year; and that the PFC provision in the House bill will create at least 40,000 in year one. This is on top of the tens of thousands already created by the changes in tax treatment of airport bonds (1,600 in Las Vegas and 1,200 in Sacramento alone, for example). And you know what? This all happens WITHOUT INCREASING THE FEDERAL DEFICIT. (AIP is all paid for by revenues already in place, and the PFC is a local fee). I can’t think of another single item on Congress’s “to-do” list that meets this test. The creation of hundreds of thousands of jobs, without increasing the deficit, over the life of this bill – indeed the taxes paid by the workers in those jobs that are created will make this a net reduction of the deficit. Read that sentence again. Wow. And it is even better if we can couple that with a permanent change in tax laws on the treatment of airport bonds.
Jobs are “Job 1” in Washington right now. The federal debt and deficit are next in line. There is NOTHING Congress can do right now that more effectively addresses both issues as impressively as does passing FAA reauthorization.
We met with Senator Harry Reid last week and it looks as if the Senate will consider this legislation soon. I am confident a good deal can be reached between House and Senate negotiators and we can get a bill signed into law.
If someone can show me any bill that can creates hundreds of thousands of jobs, does not increase the deficit, and even reduces the deficit and the debt; I’d like them to do so. Simply put, there aren’t any. This is the best shot there is. Congress, and the administration, ought to take it, right now.
Update: Please take a moment to read Airport Business’ John Infanger’s latest blog: “Slowing Down is a Mistake.” He concludes:
“FAA does a good job each year of providing a barometer of where the industry is today and where it’s headed. The fact that many in Congress have come to the realization that ongoing NextGen investment is critical is encouraging. Now if we can just get the legislators to recognize that long-term system reauthorization is just as critical.”
