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December 18, 2018

Most Public Agencies Comply With Passenger Facility Charge Program Requirements, But FAA Can Improve the Use of Its Oversight Tools

Self-Initiated
Project ID: 
AV2019015
View PDF Document
We Looked At
Congress created the Passenger Facility Charge (PFC) program in 1990 to provide funding for airports’ capital improvement projects and to increase competition between air carriers. While PFCs are local funds, the Federal Aviation Administration (FAA) oversees the program. Since 1990, FAA has approved the collection of $103.2 billion in PFC fees, which air carriers collect through passenger tickets and remit to public agencies (airport operators). To be eligible for PFC funding, public agency projects must (1) preserve or enhance the safety, security, or capacity of the national air transportation system; (2) reduce or mitigate airport noise; or (3) promote competition between or among air carriers. Given the public’s involvement with PFCs and the substantial dollars the program generates, we initiated this audit; our objective was to review FAA’s administration and oversight of airport operators’ compliance with the use of PFC funds.
 
What We Found
Most public agencies comply with PFC program requirements, but FAA could use available tools more effectively to strengthen its oversight. For example, to assess compliance, FAA reviews public agencies’ independent audit reports, but it does not ensure that those reports are timely or complete. FAA also lacks procedures for documenting public agency data in its database. As a result, the Agency does not require its Airport District Offices to verify that expenditure information is accurate or to record the receipt of audit reports and status of audit findings. Finally, while FAA officials work closely with public agency personnel to ensure that proposed projects are PFC eligible, the Agency does not have a process for determining whether completed projects meet PFC program goals.
 
Our Recommendations
We made six recommendations to improve FAA’s administration and oversight of the PFC program. FAA fully concurred with two recommendations and partially concurred with three, but did not concur with our final recommendation.

Recommendations

Open

Closed

Closed on 02.21.2020
No. 1 to FAA

Establish specific timeframes for issuing audit reports and verify that public agencies' independent audits are performed annually.

Closed on 02.21.2020
No. 2 to FAA

Update FAA's policy and procedures to require Airport District Offices (ADO) to obtain and review complete audit reports and ensure all required audit opinions are included.

Closed on 01.03.2022
No. 3 to FAA

Develop and implement procedures to ensure PFC expenditures at the Gary, IN, airport are independently audited, including the $18.3 million identified in our report. 

Closed on 02.21.2020
No. 4 to FAA

Develop and implement policies and procedures for verifying that public agencies report accurate PFC collection and expenditure information to FAA.

Closed on 12.10.2020
No. 5 to FAA

Develop and implement policies and procedures that require ADO staff to consistently record certain items in the System of Airport Reporting database to enhance its oversight of the PFC program, such as the receipt of independent audit reports, PFC-related findings reported by independent auditors, follow-up actions and comments discussed with the public agency, status of audit findings, and whether the findings are repeated from prior years.

Closed on 01.05.2021
No. 6 to FAA

Develop a methodology to review completed PFC projects that determines whether they are achieving intended program goals, and identifies best practices and opportunities for improvement.