Access pricing regulation in the U.S. domestic aviation industry

I examine how regulatory preferences in setting a federal price cap on passenger facility charges (PFCs), the variable portion of an access price in the U.S. domestic aviation industry, have evolved over time. PFCs are a per-passenger charge paid by airlines to airports. Despite the fact that the PFC cap has declined in real terms since 2001, I find that regulators have given greater importance to airports since the turn of the century. There are a number of recent proposals to increase the price cap and, at a minimum, restore the cap to 2001 real levels. I find that a price cap decrease would instead be necessary to maintain the preferences of regulators in 2001.