Customer Facility Charge

I. Introduction

Customer Facility Charges (CFCs) have emerged as a growing revenue stream for U.S. airports over the past two decades. Originally developed as a focused mechanism to finance consolidated rental car facilities (ConRACs), CFCs have expanded to fund a broader array of ground transportation infrastructure and services. This comprehensive reference guide explores the legal foundations, financial mechanisms, operational practices, and evolving landscape of CFCs in airport finance.

The importance of CFCs in airport finance cannot be overstated. As traditional revenue sources such as landing fees, terminal rents, and concession fees face pressure from airline competition and changing traveler behavior, airports have increasingly relied upon CFCs to fund necessary capital projects. The rise of Transportation Network Companies (TNCs) such as Uber and Lyft has further complicated the CFC landscape.

CFCs differ fundamentally from the more widely known Passenger Facility Charges (PFCs), which are authorized under federal law and subject to strict federal oversight. CFCs are instead authorized by state law and represent a distinct revenue category. This distinction provides context for airport finance professionals, bond counsel, rating agencies, and policymakers.

This guide examines: the legal and statutory framework authorizing CFCs; the structure and design of ConRACs; financial modeling and debt issuance; rental car industry dynamics; rate-setting methodologies; emerging issues including TNCs and autonomous vehicles; and best practices in CFC program management.

Whether you are an airport executive, finance professional, bond counsel, rating analyst, or academic researcher, this guide offers a detailed foundation for understanding CFCs in their historical, legal, financial, and operational contexts.

II. What is a Customer Facility Charge?

A. Definition and Basic Structure

A Customer Facility Charge is a fee assessed by an airport on rental car transactions—typically charged per transaction day (meaning the daily rental period)—to fund ground transportation infrastructure and services. The CFC is collected by rental car companies and remitted to the airport, effectively making rental car companies the collection agents for the airport authority.

The fundamental structure of a CFC is straightforward: a per-day fee is established for each day a rental car is rented at the airport. This fee is added to the customer's rental car bill. The rental car company collects the CFC from the customer and typically on a monthly basis, remits the collected fees to the airport along with detailed transaction reports.

Unlike some other airport fees collected at point-of-sale (such as parking fees), CFCs appear on rental car contracts and are embedded in the rental car price charged to the customer. This embedded nature creates both advantages and challenges: CFCs are often less visible to customers than overt airport fees; however, rental car companies have raised challenges to CFC rates.

CFC rates are expressed in dollars per transaction day. Rates vary significantly by airport, ranging from as little as $3-$4 per day at smaller airports to $12 or more per day at major hub airports. The variation reflects differences in facility costs, debt service obligations, operational expenses, and revenue requirements across different airports.

B. CFC vs. PFC – Key Distinctions

The distinction between CFCs and Passenger Facility Charges (PFCs) is fundamental and frequently misunderstood. While both are airport fees contributing to financing airport improvements, they operate under entirely different legal authorities and regulatory frameworks.

PFCs are authorized under federal law, specifically 49 U.S.C. § 40117. The federal government authorizes PFCs, sets maximum allowable rates (currently $4.50 per enplaning passenger), and maintains detailed authority over what projects may be funded. PFC programs are administered through the FAA, and any rate increases require FAA approval. PFCs are typically applied on a per-passenger basis and collected through airline ticketing systems.

CFCs, by contrast, are authorized exclusively by state law. No federal authorization is required to establish a CFC program. State legislatures delegate authority to airports (typically through statute) to establish CFCs. Individual state CFC statutes vary considerably in their provisions, including the maximum rates permitted, the uses of CFC revenue, and procedural requirements for rate adjustments. CFCs are collected directly by rental car companies, not through airline systems.

The regulatory oversight differs sharply as well. PFC programs are subject to FAA oversight, public notice requirements, and must be applied to eligible airport improvement projects. CFCs are subject to state oversight and are not generally subject to the same federal project eligibility requirements. PFCs cannot be used for operating expenses (with limited exceptions), whereas some state CFC statutes permit operational use of CFC revenues.

C. CFC vs. Concession Fees – Complementary Revenue Streams

While CFCs and concession fees are distinct revenue mechanisms, they often operate in parallel to fund airport operations and improvements. Understanding the relationship between these revenue streams is important for comprehensive airport financial planning.

Concession fees are revenues that airports collect from businesses operating at the airport. For rental car companies, concession fees typically take the form of either a Minimum Annual Guarantee (MAG) plus percentage rent, or a percentage rent arrangement. These fees are negotiated through concession agreements and represent a portion of rental car revenues that the airport captures.

CFCs, by contrast, are not negotiated through concession agreements. They are regulatory charges established by airport authority policy and state law. CFCs are distinct from and supplementary to concession fees. An airport may collect both concession fees (typically in the 5-10% range of rental car revenues) and CFCs (a per-transaction charge) from rental car companies.

The rationale for this dual approach is that concession fees represent the airport's share of rental car business revenues (similar to percentage rent collected from other concessionaires), while CFCs represent the customer's contribution to funding ground transportation facilities that support rental car operations.

D. History and Evolution of CFCs

CFCs originated in the 1990s as airports sought dedicated revenue sources to finance consolidated rental car facilities. Prior to the development of CFCs, rental car companies operated independent facilities scattered throughout airport grounds, creating traffic congestion, inefficiency, and environmental concerns. Forward-thinking airports recognized that consolidated rental car facilities (ConRACs) offered significant operational and environmental benefits but required capital investment of $200-250 million, as seen in the Miami ConRAC project (1999).

The first major CFC programs emerged at airports seeking to fund ConRAC development. Miami International Airport pioneered the ConRAC model in the late 1990s, establishing a CFC to fund its revolutionary consolidated rental car facility. The Miami ConRAC became a case study in airport industry literature and demonstrated the feasibility of the business model.

Throughout the 2000s, CFCs expanded significantly as airports pursued ConRAC development. Boston Logan, Tampa International, Los Angeles, Orlando, Nashville, Seattle, and other major airports established CFC programs to fund consolidated facilities. Each airport adapted the CFC model to fit its particular circumstances, resulting in variations in rate structures, use of proceeds, and financial mechanisms.

The 2008 financial crisis and subsequent recession created a temporary slowdown in ConRAC development and CFC growth, but the period also prompted important innovations in CFC structuring and management. Post-recession CFCs often incorporated more conservative financial projections, improved rate-setting methodologies, and more robust revenue management practices.

The emergence of TNCs (particularly Uber and Lyft beginning around 2012-2014) created both opportunities and challenges for CFC programs. Some airports expanded CFC concepts to impose fees on TNC transactions, creating new revenue streams. Others maintained CFC programs focused solely on traditional rental car transactions. The TNC issue remains unsettled, with regulatory approaches varying widely across airports.

E. Current Prevalence Across U.S. Airports

As of 2026, CFC programs exist at a substantial and growing number of U.S. airports. Major hub airports—including Miami, Boston, Los Angeles, San Francisco, Seattle, Orlando, Las Vegas, Denver, Chicago, and Atlanta—operate CFC programs. Many secondary and tertiary airports have also implemented CFCs as a means of funding ground transportation infrastructure.

The prevalence of CFCs varies by region. Western airports, particularly those in California and the Pacific Northwest, adopted CFCs earlier and more widely. Southeastern and Midwestern airports have increasingly implemented CFCs in recent years. Regulatory variation by state affects the pace of adoption, with states having enabling legislation seeing higher rates of CFC implementation.

Estimating the total revenue generated by CFC programs across all U.S. airports is challenging due to limited public data aggregation, but industry estimates suggest that CFC programs collectively generate hundreds of millions of dollars annually. This revenue rivals or exceeds PFC revenues at many airports, underscoring the growing importance of CFCs in airport finance.

F. Typical CFC Levels ($3-$12+ Per Transaction Day)

CFC rates vary considerably across airports based on multiple factors including facility costs, debt service requirements, operational expenses, and regional economic conditions. CFC rates at major airports range from approximately $3-$4 per transaction day at airports with modest ConRAC costs or lower demand, to $8-$12 or more per transaction day at airports with substantial facility debt or high operational costs.

The variance in rates can be illustrated by considering examples. Smaller airports or those with fully depreciated ConRAC facilities may charge $3-$5 per day. Mid-sized airports with recently constructed ConRACs or additional ground transportation facilities typically charge $6-$8 per day. Major hub airports with large, complex ground transportation operations may charge $10-$12 or more per day.

Rate increases are a periodic occurrence at most airports as facility costs rise and debt service obligations adjust. State statutes generally allow for periodic rate adjustments, either through airport authority action or through negotiation with rental car companies. The pace and magnitude of rate increases have occasionally generated pushback from rental car companies, particularly during periods of weak rental car demand.

G. California Regulatory Framework — Civil Code Section 1936

California has established a particularly important regulatory framework for CFCs under California Civil Code Section 1936. California law permits airports to impose CFCs under two distinct methodologies, each with different rate structures and reporting requirements:

Per-Contract Basis: Airports may charge $10 per rental contract, which is a simplified approach with substantially fewer reporting requirements. Rental car companies are not required to submit annual reports, triennial audit reports, or pre-collection audit reports under the per-contract methodology.

Per-Transaction-Day Basis (effective January 1, 2014): Airports may impose a charge of up to $7.50 per transaction day, limited to a maximum of 5 days per transaction. This approach allows more flexible rate-setting aligned with actual facility costs but requires more extensive reporting and compliance documentation.

Per-Transaction-Day Basis (effective January 1, 2017): California law updated the per-transaction-day maximum to $9.00 per transaction day, still limited to a maximum of 5 days per transaction. This increase reflected inflation and increased facility costs.

The per-contract option ($10 fixed rate) is attractive to smaller airports or those seeking administrative simplicity because it eliminates the reporting burden associated with transaction-day-based charges. The per-transaction-day approaches ($7.50 or $9.00) allow for more precise cost recovery but require detailed transaction reporting and compliance with additional audit and pre-collection audit requirements.

The California framework demonstrates how states can structure CFC legislation to balance airport revenue needs with administrative practicality and rental car company compliance burdens.

H. Current CFC Rates at U.S. Large and Medium Hub Airports

The following tables present current CFC rates at all U.S. large-hub and medium-hub airports, based on a comprehensive web study conducted by DWU Consulting in February 2026. CFC rates were collected from rental car company websites (primarily Avis and Budget) for one-day and 14-day rental periods, allowing identification of both daily rates and cap structures. Small-hub airport CFC rates are also available upon request from DWU Consulting.

Large Hub Airports

Medium Hub Airports

Source: DWU Consulting February 2026 web study. Rates collected from rental car company websites (Avis/Budget) for reservations dated February 19–March 5, 2026. CFC labels vary by airport ("Customer Facility Charge," "Customer Facility Fee," "Facility Fee," etc.). Small-hub airport CFC rates are available upon request from DWU Consulting.

Among the 31 large-hub airports surveyed, 28 charge a CFC, with daily rates ranging from $3.00 (IAD) to $12.00 (SAN). The average daily CFC rate among large hubs that charge one is approximately $6.70 per day. Three large-hub airports — DCA, JFK, and LGA — do not charge a CFC. Among the 27 medium-hub airports, 25 charge a CFC, with daily rates ranging from $0.50 (MKE) to $10.00 (MSY). Two medium hubs — PBI and STL — do not charge a CFC.

The most common CFC structure is a per-day charge with no cap on the number of chargeable days (used by the majority of airports outside California). California airports predominantly use a per-day charge capped at 5 days, consistent with the state's Civil Code Section 1936. A few airports — SFO, ONT, and TUS — use a flat per-contract structure. Other notable cap structures include a 7-day cap (MCO, CLE, CMH), a 10-day cap (PDX), and a 12-day cap (SLC).

III. Legal Framework

A. State Enabling Legislation

The most fundamental aspect of CFC legal authority is that CFCs are authorized exclusively by state law, not by federal law. This distinction is critical because it means that unlike PFCs (which are established under federal legislation and subject to federal oversight), CFCs fall squarely within the regulatory sphere of state governments.

State legislatures delegate authority to airport authorities—typically through either general airport enabling statutes or specific CFC authorizations—to establish CFCs. The delegation of authority is usually embedded in broader airport finance and governance statutes. Some states have comprehensive airport codes that authorize a broad array of fees and charges; others have more specific CFC statutes that detail the procedures and requirements for CFC establishment.

The state-based nature of CFC authority means that airports do not need to seek federal approval to implement or modify CFCs. However, airports must operate within their delegated state authority. An airport cannot establish a CFC in the absence of state authorization. Conversely, an airport with appropriate state authorization can establish CFCs without federal consent (though federal considerations may apply in other contexts).

This state-law foundation distinguishes CFCs from federal aid airport programs and federal oversight. While airports that receive federal grants or participate in federal programs are subject to federal grant assurances and compliance requirements, those same requirements do not directly govern CFCs unless the CFCs are used to fund federally-aided projects or generate revenues that affect federally-assisted facilities.

B. Comparison of State CFC Statutes

While all state CFC statutes share the common theme of authorizing airports to impose facility charges on rental cars, the specific provisions of state statutes vary significantly. These variations affect everything from maximum permissible rates to approved uses of revenue to procedural requirements for rate adjustments.

Some state statutes are quite general, authorizing airport authorities to establish fees as necessary to support airport facilities and operations. These broad delegations give airports substantial discretion. Other states have more prescriptive statutes that specify maximum rates, define eligible uses of revenue, and establish specific procedures for rate setting and adjustment.

California, as one of the earlier adopters of CFC programs, has statutes that authorize significant CFC rates. California's approach emphasizes that CFCs are properly characterized as customer facility charges rather than rental car company taxes. West Coast states have generally followed California's lead with relatively permissive CFC authorization.

Other states, including some in the Southeast and Midwest, have more restrictive CFC statutes that may limit rates to specified amounts, restrict revenue uses to capital projects (prohibiting operating expenses), or require specific approval procedures. These variations create a patchwork of CFC authority across the United States.

C. Anti-Head Tax Act (49 U.S.C. § 40116)

While CFCs are authorized by state law, a crucial federal constraint applies: the Anti-Head Tax Act, codified at 49 U.S.C. § 40116. This statute prohibits states and political subdivisions (including airports) from imposing a tax, a charge, or a fee on the landing, taking off, or operation of aircraft engaged in interstate air commerce or on persons traveling in air commerce.

The Anti-Head Tax Act has generated substantial litigation and regulatory interpretation regarding the scope of its prohibition. The critical question is whether CFCs constitute a prohibited tax or charge on air commerce under the statute. A secondary question is whether CFCs, even if they apply to activities related to air commerce, constitute impermissible discrimination against interstate commerce.

The FAA and courts have generally concluded that CFCs, properly structured, do not violate the Anti-Head Tax Act because they are not directly imposed on the landing, taking off, or operation of aircraft, nor are they imposed on air travelers in their capacity as air travelers. Instead, CFCs are charges on rental car transactions—a ground transportation service ancillary to air travel.

However, the distinction can be subtle. Charges that are too closely tied to passenger volumes, passenger service, or aircraft operations risk Anti-Head Tax Act violations. Similarly, CFCs that discriminate between on-airport and off-airport rental car operations may violate the statute. These issues have generated litigation in recent years.

D. Federal Grant Assurances

Airports that receive federal grants must comply with extensive federal grant assurances. These assurances include obligations to establish adequate revenue sources, operate the airport on a self-supporting basis, and avoid unreasonable discrimination among users.

A critical question for airports establishing CFCs is whether CFC revenues are subject to federal grant assurance obligations. If an airport intends to pledge or rely upon CFC revenues to support debt service on federally-assisted projects, or if CFC revenues contribute to the overall financial health of the airport as a federal aid recipient, federal grant assurance implications may arise.

The FAA's position is that CFC revenues may be used to support airport operations and federally-aided projects, but such use must be consistent with grant assurance obligations. In particular, grant assurances require that fees and charges be reasonable and not unduly discriminatory. A CFC rate that is unreasonably high or that discriminates against one segment of rental car operators may violate grant assurance obligations.

E. FAA Revenue Use Policy

The FAA maintains a comprehensive Revenue Use Policy that governs how airports may use revenues generated from activities at the airport. The policy addresses landing fees, terminal rents, parking revenues, concession revenues, and other airport income streams.

The Revenue Use Policy is premised on the principle that airport revenues should be used for airport purposes and to maintain a viable, self-supporting airport system. The policy discourages cross-subsidization of unrelated activities and requires that fees be reasonable and not generate excessive profits for the airport.

CFCs, as a specialized revenue stream dedicated to ground transportation facilities, generally fit within the FAA Revenue Use Policy framework. As long as CFCs are used to support ground transportation facilities and operations (ConRACs, TNC facilities, ground transportation infrastructure, and related services), the policy does not present obstacles.

F. Tax-Exempt Bond Eligibility

A significant percentage of ConRAC and ground transportation facility financing is accomplished through tax-exempt bonds. CFCs are frequently pledged as security for these bonds. An important legal consideration is whether revenues from CFCs, as customer charges, maintain the facility's tax-exempt bond status or whether the type of facility being financed affects tax-exempt bond eligibility.

Generally, facilities financed with tax-exempt bonds must be airport facilities within the meaning of federal tax law. ConRACs clearly qualify as airport facilities because they are directly related to airport operations and serve airport users. Tax-exempt bonds may be issued to finance ConRAC construction with CFC revenues pledged to support debt service.

The IRS has specific requirements regarding the use of bond-financed facilities and the derivation of revenues. If a ConRAC is financed with tax-exempt bonds, the facility generally must be operated in a manner that serves public, airport purposes and cannot be operated primarily to benefit a private operator (such as a particular rental car company).

G. Key Court Cases

While the number of reported court decisions directly addressing CFCs is relatively small, several important cases have shaped the legal landscape. Cases addressing airport fee authority generally have upheld airport authority to impose reasonable charges for services and facilities provided, as long as the charges are applied non-discriminatorily and are supported by documented costs.

Cases addressing the Anti-Head Tax Act have consistently held that properly structured user fees and facility charges are not prohibited head taxes, even if they apply to persons traveling in air commerce. Cases addressing federal grant assurance compliance have emphasized that airport fees must be reasonable and non-discriminatory.

IV. Consolidated Rental Car Facilities (ConRACs)

A. What is a ConRAC and Why Airports Build Them

A Consolidated Rental Car Facility (ConRAC) is a centralized, typically off-terminal facility where multiple rental car companies operate from a shared building or complex. In a ConRAC model, customers renting cars proceed to the consolidated facility, where they conduct rental transactions and retrieve their vehicles. ConRACs replace the traditional model in which individual rental car companies operated scattered facilities throughout airport grounds.

The ConRAC concept emerged as airports sought to address mounting problems with decentralized rental car operations. In traditional models, each major rental car company might operate its own facility, parking lots, and internal shuttle operations. This arrangement created inefficiencies including: customers traveled to scattered locations, ground traffic was dispersed across airport areas, and environmental impacts were heightened from multiple independent operations.

The primary driver for ConRAC development is operational efficiency. By consolidating operations in a single, designed facility with shared infrastructure, airports and rental car companies can achieve improvements in customer experience, traffic flow, and operational costs. Customers proceed to a single location rather than being directed to multiple scattered facilities.

ConRACs also offer environmental benefits. Consolidated operations reduce the overall ground traffic footprint at airports, lower emissions from redundant shuttles and vehicles, and support sustainability goals. Many ConRACs incorporate environmental features such as alternative fuel vehicle charging, LEED construction standards, or green infrastructure.

B. Benefits: Reduced Congestion, Increased Revenues, Land Efficiency, Traffic Reduction

The ConRAC model offers multiple benefits, delivering concrete financial and operational advantages:

1. Reduced Ground Transportation Congestion

By consolidating rental car operations in a single, efficiently designed facility, ConRACs eliminate the need for multiple scattered rental car company facilities and reduce associated ground traffic. The consolidation eliminates redundant shuttle bus services that previously operated from multiple locations throughout airport grounds. Where airports previously required numerous independent shuttle services serving dispersed facilities, ConRACs require a single integrated ground transportation system. This consolidation reduces vehicle miles traveled, minimizes ground traffic conflicts, and improves overall ground transportation efficiency. Environmental benefits include reduced emissions of 20-30% compared to dispersed rental car operations.

2. Increased Rental Car Revenues

ConRACs create a competitive advantages for on-airport rental car operations compared to off-airport competitors. When rental car companies operate in a modern, accessible ConRAC facility integrated with airport ground transportation systems, they capture more rental transactions from customers. Off-airport rental car companies are required to operate 'double-bussing' arrangements—customers must take one shuttle from the airport terminal to the off-airport facility, and another shuttle from that facility to their vehicle. This inconvenience and added time cause many customers to use on-airport facilities. The on-airport relocation of rental car operations in ConRACs directly captures customers who might otherwise use off-airport competitors, increasing rental volumes and CFC revenues for the airport.

3. Free Up On-Airport Properties for Economic Development

Prior to ConRAC development, rental car facilities typically occupied multiple valuable, dispersed parcels on airport property. A ConRAC consolidates these operations in a single location, potentially on less valuable land or in integrated ground transportation hubs. This consolidation frees up valuable airport property that previously served dispersed rental car operations. Airports can then redeploy this land for other economic development purposes—terminal expansions, additional concession facilities, cargo facilities, or other revenue-generating uses. At major airports where real estate is at a premium, the ability to recover and redeploy valuable land represents a significant economic benefit from ConRAC consolidation.

From a customer experience perspective, the consolidated model significantly improves the rental car experience. Customers proceed to a single, well-marked facility rather than being confused by directions to multiple scattered locations. Transaction times are typically faster in modern ConRACs designed with efficient queuing and processing. Operational benefits are also significant. Shared facility infrastructure—such as roadways, parking structures, utilities, and shuttle services—reduces the overall cost of operations compared to maintaining multiple separate facilities.

C. ConRAC Design and Operations

Modern ConRACs vary in design based on airport-specific circumstances, but certain common elements characterize successful facilities. Most ConRACs include a multi-story building housing rental car company offices, transaction counters, and administrative functions. The building is designed to process large volumes of customers efficiently, with clear wayfinding, adequate queuing areas, and customer-friendly interfaces.

Extensive surface or structured parking for rental vehicles awaiting pickup is a key feature. Parking is organized by rental car company and status, with clear signage. Areas for vehicle inspection, fueling, cleaning, and preparation are also essential, with modern ConRACs including automated systems for vehicle tracking and condition documentation.

Shuttle services connecting the ConRAC and airport terminals via shuttle bus, automated people mover (APM), or other transit systems operate frequently to provide seamless customer connections. Shared utilities (electricity, water, wastewater treatment) serve all operators. Modern ConRACs include telecommunications infrastructure, security systems, and environmental controls.

From an operational perspective, ConRACs typically function as follows: customers arriving at the airport proceed to the ConRAC facility, either by shuttle from the terminal or by direct ground transportation. At the facility, customers proceed to their rental car company's counter area within the consolidated building. After completing rental transactions, customers proceed to designated parking areas to retrieve their vehicles.

D. CFC as Primary ConRAC Funding Mechanism

CFCs have become the primary mechanism for funding ConRAC development and operations. The fundamental logic is compelling: a ConRAC is built to serve rental car customers and is funded by a charge assessed on each rental car transaction. The CFC generates the revenue stream necessary to service debt on construction financing and to cover ongoing operational and maintenance costs.

This creates a clear nexus between the revenue source (CFCs paid by rental car customers) and the benefit received (access to modern, efficient ConRAC facilities). The alignment of costs and benefits supports the proposition that CFCs are legitimate charges for services rendered.

Typical CFC-financed ConRAC projects proceed as follows: an airport authority determines that a ConRAC would benefit airport operations and customer experience. The authority undertakes a feasibility study establishing demand projections, facility costs, and required CFC rate levels. If the business case is sound, the airport authority executes CFC-backed revenue bonds to finance construction. The CFC revenues collected during the facility's useful life service these bonds and fund operations and maintenance.

E. Major ConRAC Projects

Miami International Airport developed one of the first major ConRACs in the late 1990s, establishing a CFC to fund its revolutionary consolidated rental car facility. The Miami ConRAC became a case study for the airport industry and demonstrated the feasibility of the business model.

Boston Logan developed a major ConRAC facility in the early 2000s as part of a broader ground transportation redesign. Tampa International Airport developed a well-regarded ConRAC facility that has become known for customer-friendly design and efficient operations.

Los Angeles International Airport undertook a major ConRAC project as part of its broader airport modernization initiative. The LAX ConRAC was designed with advanced environmental features and integrated connections to the airport's new APM system. Orlando International Airport developed the South Terminal ConRAC as part of its terminal modernization program.

Nashville International Airport developed a ConRAC facility serving as a model for mid-size airport ground transportation infrastructure. Salt Lake City developed ConRAC infrastructure as part of its ground transportation modernization. Seattle-Tacoma developed an advanced ConRAC facility integrated with other ground transportation improvements.

F. ConRAC Cost Comparison Table

The following table provides a summary of major ConRAC projects, illustrating the range of project costs, CFC rates, and debt service levels:

Note: Figures are approximate and rounded. Project costs include site preparation, infrastructure, construction, contingencies, and soft costs. CFC rates shown are approximate initial rates and have generally increased since project completion.

V. CFC Revenue and Financial Structure

A. How CFCs are Collected

The collection mechanism for CFCs is straightforward in principle but complex in execution. CFCs are collected by rental car companies acting as agents for the airport. Unlike passenger facility charges, which are collected through airline ticketing systems, or parking fees, which are collected at exit booths, CFCs are embedded in rental car transactions.

When a customer rents a vehicle at an airport, the rental car company adds the CFC to the rental invoice. The CFC appears as a line item on the rental agreement between the customer and the rental car company. The rental car company collects the CFC directly from the customer as part of the total rental transaction price.

Rental car companies are responsible for remitting collected CFCs to the airport, typically on a monthly basis. Along with CFC remittance, rental car companies provide detailed reports documenting the number of rental transactions, transaction days, and CFCs collected. These reports are the primary mechanism for airport verification of CFC compliance.

The role of rental car companies as collection agents creates both advantages and potential issues. On the positive side, rental car companies have sophisticated transaction recording systems and the ability to track rental volumes and CFC collections with precision. On the negative side, rental car companies may occasionally dispute CFC rates or challenge the basis for rate increases.

B. CFC Rate Setting and Adjustment Mechanisms

CFC rates are established by airport authorities, typically through a formal process involving financial analysis, cost justification, and often negotiation or notice-and-comment procedures with rental car companies. The process for establishing rates varies by airport and is governed by applicable state law and airport authority rules.

Most CFC rate-setting follows a cost-of-service methodology. The airport determines the annual costs of the ConRAC facility, including debt service on bonds, operating and maintenance expenses, and contributions to reserves. The airport then divides these costs by the projected number of rental transaction days to establish a per-day CFC rate.

Rate adjustments typically occur annually or biannually based on updated cost projections, changes in debt service obligations, operational expense changes, and rental car volume forecasts. Some airports build in annual adjustment mechanisms tied to inflation or other cost indices. Others conduct more periodic reviews and adjust rates in larger increments.

Transparency in rate-setting is important for maintaining relationships with rental car operators and avoiding disputes. Airports that publish detailed cost justifications for rate increases, invite rental car company input, and explain the basis for rates generally encounter fewer challenges.

C. Revenue Forecasting and Modeling

Accurate revenue forecasting is critical for CFC financial planning, debt service projections, and rate adequacy analysis. CFC revenues depend on two primary variables: the number of rental car transactions (or transaction days) and the CFC rate per transaction.

Rental car transaction volumes at airports are driven by passenger traffic, rental car market penetration, and seasonal patterns. Airports typically maintain detailed historical data on rental transactions and use this data to project future volumes. Typical models incorporate passenger forecast growth, assumptions about the percentage of passengers who rent cars, and seasonal factors.

The challenge in CFC revenue modeling is predicting future rental car demand. Recession or economic downturns reduce travel and therefore rental car volumes. Industry trends (such as the rise of TNCs and vehicle-sharing services) may reduce traditional rental car demand. Most CFC bond documents require conservative revenue projections, often discounting expectations by 10-25% to create a margin for error.

Rental car volume trends in recent years have been mixed. The COVID-19 pandemic severely suppressed travel and rental car demand in 2020-2021, reducing CFC revenues at airports. Recovery patterns have varied by airport size across different markets. Meanwhile, the long-term trend of TNC growth may create structural headwinds for traditional rental car demand.

D. CFC-Backed Revenue Bonds

A CFC-backed revenue bond is a municipal security issued by an airport authority with CFC revenues pledged to pay debt service and other bond obligations. These bonds are revenue bonds because they are secured by dedicated revenues (CFCs) rather than general airport revenues or general obligation pledges.

CFC-backed bonds are typically special facility bonds, meaning they are secured only by the revenues of the specific facility (ConRAC) rather than all airport revenues. The security for CFC-backed bonds consists of a first lien on CFC revenues, plus often reserve accounts, contingency reserves, and other credit enhancements.

Bond documents establish detailed covenants governing how CFCs must be collected, reported, and used. Revenues must be applied in a specified order of priority, with bond service payments receiving highest priority.

CFC-backed bonds are issued as either taxable or tax-exempt securities. Tax-exempt bonds are preferable from a cost-of-capital perspective because they allow investors to exclude interest income from federal taxation, allowing the issuer to offer lower interest rates.

E. Debt Service Coverage Requirements

Debt service coverage ratios (DSCR) are a standard metric in airport financial analysis. The DSCR measures the extent to which cash flow (CFC revenues minus operating expenses) exceeds debt service payments. A DSCR of 1.25x means that revenues, after operating expenses, are 125% of the amount needed to pay debt service—creating a 25% margin for error.

Most CFC bond agreements require minimum debt service coverage ratios, typically in the range of 1.25x to 1.50x. The specific requirement is established based on the risk profile of the project and credit rating targets. More conservative projects or lower-rated bonds may require higher coverage ratios.

Coverage ratios must be maintained throughout the life of the bonds. If revenues decline or expenses increase, the airport may face a situation where the DSCR falls below the required threshold. In such circumstances, the airport may be required to increase the CFC rate, reduce operating expenses, or use reserves to maintain adequate coverage.

F. Bond Credit Analysis and Rating Agency Perspectives

When airports issue CFC-backed bonds, the bonds are typically rated by one or more rating agencies (such as Standard & Poor's, Moody's, or Fitch). The rating agencies conduct financial analysis of the airport, the facility, and the revenue streams to assess the creditworthiness of the bonds.

Rating agencies focus on several key metrics: debt service coverage ratios and coverage trends; historical CFC revenues and forecasted trends; rental car market dynamics and competitive conditions; facility condition and capital needs; competitive threats from TNCs; and rental car company financial health and stability.

A strong CFC-backed bond typically features stable or growing CFC revenues, debt service coverage ratios above 1.50x, a diverse base of rental car operators, conservative reserve accounts, and facility conditions that support long-term revenue generation. The ratings assigned to CFC-backed bonds generally range from BBB- (lowest investment grade) to AAA (highest).

G. Reserve Fund Requirements

Bond documents typically require airports to maintain reserve accounts funded from CFC revenues. Common reserve accounts include debt service reserves, capital improvement reserves, operations and maintenance reserves, and contingency reserves. These reserves provide financial stability and reassure bond investors that the facility can handle temporary revenue declines or unexpected expenses.

H. CFC Revenue Trends and Growth Patterns

Historical CFC revenue trends show significant variation based on rental car demand and facility maturity. When ConRACs first open, CFC revenues typically grow as the facility ramps up and rental car volumes increase. After a period of growth, revenues typically stabilize around the facility's capacity levels.

Economic cycles have a substantial impact on CFC revenues. During economic booms, travel increases, rental car demand rises, and CFC revenues grow. During recessions, travel contracts, rental car demand falls, and CFC revenues decline. The 2008-2009 financial crisis caused significant CFC revenue declines, with some airports experiencing 20-30% decreases.

VI. CFC-Backed Bond Financing

A. Bond Structure and Security

A CFC-backed bond is a security issue backed by the airport's pledge of CFC revenues. The fundamental structure establishes a lien on CFC revenues in favor of bond holders, with CFC revenues applied in a specified order of priority to service bond obligations.

The basic structure of a CFC-backed bond typically provides: the principal obligation (the face amount of the bond, typically repaid at maturity or through scheduled amortization); interest payments (periodic, usually semi-annual, payments to bond holders); security (a first lien on CFC revenues, sometimes with senior/subordinate structures); and covenants (contractual obligations regarding rate-setting, revenue collection, reserve funding, and financial management).

Bond documents typically establish a waterfall or priority of payments. CFC revenues, as collected, are applied in this order: operational expenses (ConRAC staffing, maintenance, utilities), debt service on bonds, funded reserves, and any surplus. This structure ensures that debt service receives priority over discretionary uses of revenue.

Gross Pledge vs. Net Pledge Structure

An important structural distinction in CFC bond documents is whether CFCs are pledged on a gross or net basis. Most CFC-backed bonds use a gross pledge of revenues, meaning that the entire CFC revenue stream is pledged to debt service without first deducting operating and maintenance expenses. This structure is strongly preferred by bond investors because it means that debt service payments have priority over ConRAC operating expenses.

In a gross pledge structure, the waterfall of payments gives highest priority to debt service, with rental car companies collectively required to pay bond investors before ConRAC operating expenses are funded. This structure means that rental car companies cannot operate the ConRAC without simultaneously meeting bond obligations—creating a fundamental alignment of incentives. As one credit analyst noted, gross pledge structures are 'much preferred by bond investors because the rental car companies cannot operate without paying the bond investors first.'

By contrast, a net pledge structure would deduct operating expenses first, with remaining net revenues pledged to debt service. This structure provides less investor security because ConRAC operating needs could theoretically compete with or displace debt service payments.

The gross pledge approach has become the industry standard for CFC bonds and reflects bond investors' strong position in requiring that bond repayment be treated as an operational prerequisite for ConRAC operations.

Contingency Rent Provisions

Beyond the primary CFC revenue stream, most ConRAC lease agreements include contingency rent clauses that provide supplemental security to bond holders. Under contingency rent provisions, the rental car companies collectively agree to pay whatever is necessary to meet bond service obligations if CFC revenues prove insufficient for any reason.

Contingency rent provisions operate as a collective backup mechanism, with all rental car companies operating in the ConRAC essentially guaranteeing bond service payments. This means that even if CFC collections fall short of projections due to declining rental volumes or other factors, bond investors are protected by the rental car companies' obligation to collectively make up any shortfall.

This contingency rent mechanism provides significantly greater security to bond investors than relying on CFC revenues alone. It reflects the fundamental principle that the ConRAC cannot operate without meeting bond obligations, and rental car companies' continued use of the facility is conditional on their satisfying all financial obligations, including both CFC rates and contingency rent if necessary.

B. Special Facility Bonds vs. General Airport Revenue Bonds

Airports may finance ConRACs through either special facility bonds (secured only by CFC revenues) or general airport revenue bonds (secured by all airport revenues, including airlines, concessions, parking, and other sources).

Special facility bonds are more common for ConRAC financing. These bonds are secured only by CFC revenues and the ConRAC facility. From a credit perspective, special facility bonds depend entirely on the performance of the specific facility. General airport revenue bonds, by contrast, are secured by all airport revenues.

The choice between special facility and general airport revenue bonds affects interest rates and credit ratings. Special facility bonds, depending on the credit quality of the specific facility, may carry higher interest rates than general airport revenue bonds backed by the full resources of the airport.

C. Rate Covenant Provisions

A critical bond covenant is the rate covenant, which typically requires the airport to establish and maintain CFC rates sufficient to generate revenues adequate to cover debt service and operating expenses. Rate covenants protect bond investors by ensuring that the airport cannot arbitrarily lower CFC rates.

If revenues decline due to factors outside the airport's control (such as a recession), the airport may be forced to raise CFC rates to maintain compliance with rate covenants. This creates a tension between airports' desire for flexibility in setting rates in response to market conditions and bond covenants' requirement for sufficient rates to cover debt service.

D. Additional Bonds Tests

Bond documents typically include additional bonds tests that restrict the airport's ability to issue additional debt secured by CFC revenues. These tests protect existing bond holders by preventing the airport from issuing so much additional debt that coverage ratios decline to unsustainable levels.

A typical additional bonds test might provide that the airport may only issue additional CFC-backed bonds if projected debt service coverage ratios on all outstanding and proposed bonds are at least 1.25x or 1.50x. This prevents the airport from over-leveraging the CFC revenue stream.

Additional Bonds Test Methodologies

CFC bond documents employ two primary methodologies for testing coverage adequacy before issuing additional bonds:

Historical Test: Net revenues (CFC revenues minus operating expenses) from the most recently completed fiscal year must be at least 125% to 150% of the maximum annual debt service on all outstanding bonds plus the proposed new bonds. This historical test uses actual performance as the baseline for determining additional borrowing capacity.

Prospective Test: Projected net revenues for the coming fiscal year must meet the same ratio requirements. Importantly, the prospective test may only include approved CFC rate increases—not speculative future rate increases that have not yet been authorized. This conservative approach protects creditors by preventing issuers from assuming rate increases that may not materialize.

Some bond documents restrict contingency rent from being included in prospective additional bond tests, recognizing that contingency rent represents an emergency backstop rather than a reliable, predictable revenue source for sizing new debt.

Reserve Accounts in Additional Bonds Analysis

CFC bond documents typically require the airport to establish and maintain multiple reserve accounts:

• Debt Service Reserve Account: Typically funded at 125% or one year of maximum annual debt service (or other percentage specified in bond documents)

• Rolling Coverage Account: Typically 25-50% of annual debt service, maintained to cover temporary revenue shortfalls

• Rate Stabilization Fund: Typically 5-10% of total bond proceeds or 50% or more of annual debt service, used to smooth CFC rate adjustments over time

• Capital Improvement Reserve: Set-aside from revenues to fund facility maintenance, repairs, and capital improvements

These reserves are deducted from available revenues in calculating additional bonds tests, ensuring that needed financial cushions are maintained even as additional debt is incurred.

E. Coverage Ratios (Typically 1.25x-1.50x)

Most CFC-backed bonds require coverage ratios in the 1.25x-1.50x range. Conservative projects or lower-rated bonds may require higher coverage (1.75x or more). Less risky projects or higher-rated bonds may accept lower coverage thresholds.

Coverage ratios are calculated on both a historical basis (actual revenues and expenses in the prior fiscal year) and a pro forma basis (projected revenues and expenses for the coming year). Both metrics are important for assessing past performance and expected future performance.

F. Bond Rating Considerations

When airports issue CFC-backed bonds, obtaining favorable ratings from rating agencies is important for minimizing interest costs. Rating agencies assign ratings based on their assessment of the likelihood that bond holders will receive timely payment of principal and interest.

To obtain favorable ratings, airports should maintain strong historical coverage, invest in facility maintenance, manage CFC revenues conservatively, and communicate effectively with rating agencies about the facility's financial condition and market outlook.

G. Notable CFC Bond Issuances

Major CFC-backed bond issuances have financed ConRACs at leading U.S. airports. Los Angeles International Airport issued multi-hundred-million-dollar bonds to finance the LAX ConRAC and associated ground transportation improvements. Miami International Airport issued bonds to finance the pioneering Miami ConRAC. Boston Logan, Tampa International, Orlando, and other major airports have issued bonds backed by CFC revenues.

Most CFC-backed bonds are issued in the investment-grade category (BBB or higher) by at least one rating agency. The specific ratings depend on the credit strength of the airport and the projected performance of the facility.

G2. Airports with Outstanding CFC Bonds

As of recent years, a substantial number of U.S. airports have issued and maintain outstanding debt backed by CFC revenues. The following airports have active CFC bond programs:

Pre-2012 CFC Bond Issuances

• ANC (Anchorage, AK) — 2005ATL (Atlanta, GA) — 2006BNA (Nashville, TN) — 2010BWI (Baltimore/Washington, MD) — 2002BOS (Boston, MA) — 2011CLT (Charlotte, NC) — 2011IAH (Houston, TX) — 2014MCO (Orlando, FL) — 2009MSY (New Orleans, LA) — 2009PHX (Phoenix, AZ) — 2004PVD (Providence, RI) — 2006

Post-2012 CFC Bond Issuances

• AUS (Austin, TX) — 2013ORD (Chicago, IL) — 2013SAN (San Diego, CA) — 2014SAT (San Antonio, TX) — 2015TPA (Tampa, FL) — 2015

Planned and Special Cases

• LAX (Los Angeles, CA) — Major CFC-backed bond financing for ConRAC developmentHawaii airports (HNL, OGG, others) — Planned CFC bond programsMIA (Miami, FL) — Unique funding structure utilizing FDOT TIFIA loans rather than traditional bond financing

These issuances demonstrate that CFC bonds have become a primary mechanism for ConRAC and ground transportation facility financing across major U.S. airports. The geographic distribution reflects the nationwide adoption of the CFC model.

H. Comparison to PFC-Backed Bonds

PFC-backed bonds and CFC-backed bonds are both airport revenue bonds backed by dedicated airport revenue streams. However, important differences exist. PFC revenues grow with passenger traffic and are generally considered stable and growing. CFC revenues depend on rental car transactions, which may be subject to greater volatility and long-term decline risks from TNCs.

PFC programs are subject to FAA oversight and approval. CFC programs are subject only to state law. PFC rates are capped by federal law at $4.50 per enplaning passenger. CFC rates have no federal cap, allowing CFCs to increase more readily than PFCs.

VII. Rental Car Industry Dynamics

A. Overview of Rental Car Industry at Airports

The rental car industry at airports is substantial, competitive, and dynamic. Airport rental car operations represent a significant portion of the total rental car industry, with major rental car companies maintaining significant operational footprints at major hub airports.

Rental car operations at airports generate revenues from two primary sources: transaction fees (rental rate charged to customers) and concession fees paid to airports. Rental car companies operate independently at airports, though they are subject to airport concession agreements.

B. Major Rental Car Companies

Several major rental car companies dominate airport operations. Enterprise Holdings (which operates Enterprise, National, and Alamo brands) is the largest rental car company by market share, operating at virtually all significant airports. Hertz operates a large network of airport rental facilities. Avis Budget Group (which operates Avis and Budget brands) maintains significant presence at major airports.

At most major airports, Enterprise, Hertz, and Avis/Budget collectively represent 80-90% of rental transactions. This concentration means that the financial condition and competitive dynamics of these major companies significantly affect CFC revenues and airport revenue stability.

C. Airport Concession Agreements with Rental Car Companies

Rental car companies operate at airports pursuant to concession agreements with the airport authority. These agreements establish the terms of operation, including facility allocation, fee arrangements, service standards, and operational obligations.

The financial arrangements within concession agreements typically specify the fees that rental car companies must pay to the airport. These arrangements commonly take one of two forms: Minimum Annual Guarantee (MAG) plus percentage rent, or percentage rent with no MAG.

D. Minimum Annual Guarantee (MAG) vs. Percentage Rent

The Minimum Annual Guarantee (MAG) plus percentage rent model works as follows: the rental car company agrees to pay a guaranteed minimum annual fee (the MAG) regardless of actual revenues, plus a percentage of rental revenues exceeding a specified threshold (typically in the range of 5-10% of revenues).

The MAG provides the airport with revenue certainty, as the airport receives at least the guaranteed amount even if revenues decline. The percentage rent component allows the airport to share in revenue growth. The MAG plus percentage structure creates an incentive for the rental car company to grow revenues.

Some airports use a pure percentage rent model with no MAG. In this model, the rental car company pays only a percentage of revenues. Pure percentage arrangements create less airport revenue certainty but may be more attractive to rental car companies.

E. On-Airport vs. Off-Airport Rental Car Operations

Rental car operations at airports exist on a spectrum from on-airport (located within airport grounds and included in airport concession agreements) to off-airport (located outside airport property, independent of airport control).

Off-airport facilities (sometimes called satellite locations) are located on non-airport property, often at nearby hotels or commercial properties. Off-airport operations may offer lower prices but are less convenient for customers arriving at airports.

From an airport revenue perspective, off-airport operations are a competitive threat. Customers using off-airport facilities generate no concession fees for the airport and may generate no CFC. Some airports have addressed this by extending CFC requirements to off-airport operators, though this practice remains contested.

F. TNCs (Uber/Lyft) Impact on Rental Car Volumes

Transportation Network Companies—particularly Uber and Lyft—have emerged as significant competitors to traditional rental car operations at airports. TNCs offer an alternative to renting a car: rather than renting a vehicle and driving to one's destination, travelers can use Uber or Lyft for point-to-point transportation.

TNCs have captured a growing share of the transportation market at airports. Data from major airports indicates that TNC volumes (pickups and dropoffs) have grown substantially, from negligible levels in 2010-2012 to a substantial portion of ground transportation activity at major airports by the mid-2020s.

This growth in TNC usage presents challenges for traditional rental car demand. Fewer customers choosing to rent cars means lower rental volumes and, consequently, lower CFC revenues. However, the relationship is complex. Not all travelers who use TNCs would otherwise have rented cars.

G. Industry Consolidation Effects

The rental car industry has experienced consolidation, with smaller companies being acquired by or disappearing in favor of larger operators. This consolidation has implications for airports. Consolidation reduces the number of independent rental car operators, increasing the market power of individual companies relative to the airport authority.

A concentrated rental car market at an airport may create market power for rental car companies in negotiating concession fees and CFC rates. Conversely, from a CFC revenue stability perspective, a concentrated market with a few large, stable operators may provide more predictable revenues than a fragmented market.

VIII. CFC Rate Setting and Administration

A. Rate Determination Methodology

CFC rate determination follows a cost-of-service approach. The airport determines the annual costs of the ConRAC facility, including debt service, operating and maintenance expenses, and reserve fund contributions. The airport then establishes a CFC rate that is projected to generate revenues equal to these annual costs.

The basic formula is: Annual Costs (Debt Service + O&M + Reserves) ÷ Projected Annual Rental Transaction Days = CFC Rate Per Day. Accuracy in these inputs is critical. Overly optimistic revenue projections lead to insufficient rates and potential debt service coverage problems. Overly conservative projections lead to excessive rates.

B. Cost Recovery Principles

A fundamental principle in CFC rate setting is that CFCs should recover the costs of providing the facilities and services for which CFCs are collected. CFCs are generally structured to align costs with revenues or be diverted to unrelated airport uses.

This principle is supported by legal requirements in some state statutes, federal grant assurance obligations requiring reasonable, non-discriminatory fees, FAA Revenue Use Policy principles, and airport management best practices. Cost recovery means that CFC rates should be sustainable long-term and roughly track the costs of facility operations.

C. Annual Rate Adjustments

Most CFCs are adjusted annually or biannually to account for cost inflation, debt service changes, and volume changes. The pace of rate adjustments varies by airport. Some airports adjust rates annually based on updated cost and volume projections. Others adjust rates less frequently.

Rate adjustment methodology varies. Some airports implement automatic adjustments tied to inflation indices (such as the Consumer Price Index). Others conduct annual reviews and adjust rates on a discretionary basis.

D. Rental Car Company Reporting Requirements

Rental car companies are required to report CFC collections to the airport on a regular basis (typically monthly). These reports document the number of rental transactions, rental transaction days, CFC rates applied, and total CFCs collected.

Detailed reporting allows airports to verify accurate CFC collection and remittance, track trends in rental volumes, compare actual revenues to projections, and identify compliance issues or disputes.

E. Audit Provisions

To ensure compliance with CFC obligations, most airport concession agreements include audit provisions. These provisions allow the airport to audit rental car company records to verify proper CFC collection and reporting. Audits are an important tool for preventing CFC evasion or misreporting.

F. Collection Enforcement

While CFC collection issues are relatively rare at major airports, airports have mechanisms to enforce CFC collection obligations. Enforcement mechanisms include contractual penalties for non-compliance, withholding of concession fee reductions, suspension or non-renewal of concession agreements, and legal action for contract breach.

G. Treatment of TNC Fees vs. Rental Car CFCs

An emerging issue in CFC administration is how to treat fees on Transportation Network Companies (Uber, Lyft, etc.). Some airports have implemented separate TNC fees or surcharges. Others have expanded traditional CFCs to include TNCs. Still others have not implemented any TNC charges.

The rationale for imposing fees on TNCs is that TNC services (like rental cars) use airport ground transportation facilities, consume parking and circulation infrastructure, and generate congestion. TNC operators arguably should contribute to the cost of this infrastructure.

However, TNC fee implementation has proven controversial, with TNCs arguing that they operate differently than rental cars. From a CFC revenue perspective, TNC fees may represent an opportunity to expand the CFC revenue base as traditional rental car demand potentially declines.

IX. Legal Challenges and Disputes

A. Rental Car Company Challenges to CFC Levels

Rental car companies have periodically challenged CFC rate levels, arguing that increases are excessive, not properly justified, or violate applicable law or concession agreements. These challenges have taken various forms, including formal protests, litigation, and negotiated disputes.

Grounds for rental car company challenges have included: rates are excessive and not supported by justified facility costs; rates discriminate among rental car companies; rates violate specific state statutory limits; and rate increases violate procedural requirements.

B. Anti-Head Tax Act Litigation

CFCs have been subject to Anti-Head Tax Act challenges, with rental car companies and others arguing that CFCs are effectively head taxes prohibited by the statute. To date, these challenges have been largely unsuccessful. Courts have consistently held that CFCs are charges for ground transportation services, not taxes on air commerce.

C. State Constitutional Challenges

In some cases, rental car companies or public interest groups have challenged CFCs under state constitutional provisions. These challenges typically invoke state constitutional limits on taxing authority, requirements for due process, or equal protection principles. In most cases, courts have upheld CFC authority under state enabling statutes.

D. Revenue Diversion Allegations

A legal issue that has arisen at some airports is whether CFC revenues are being diverted to purposes not authorized by state law or not related to ground transportation facilities. If CFCs are collected for ostensibly dedicated purposes but revenues are used for unrelated airport activities, this could constitute improper revenue diversion.

E. Off-Airport Operator Disputes

Off-airport rental car operators have occasionally disputed airports' attempts to require CFCs on off-airport transactions or to impose fees on off-airport operations. These disputes turn on whether an off-airport operator located outside airport property is subject to airport regulatory authority.

F. TNC Fee Legal Challenges

As airports have attempted to impose fees on TNCs, TNCs and their representatives have raised legal challenges, arguing that airports lack authority to impose TNC charges or that charges should be limited to actual facility usage rather than per-transaction assessments.

G. Notable Court Decisions

Cases addressing airport fee authority generally have upheld airport authority to impose reasonable charges for services and facilities provided, as long as the charges are applied non-discriminatorily and are supported by documented costs. Cases addressing the Anti-Head Tax Act have consistently held that properly structured user fees are not prohibited head taxes.

X. CFC and Airport-Airline Relationship

A. CFC Impact on Airline Costs

A significant advantage of CFC programs from an airport perspective is that CFCs are paid by customers (collected through rental car companies) rather than by airlines. By funding ground transportation through CFCs rather than through general airport revenues supported by airline landing fees, airports effectively transfer the cost of ground transportation infrastructure to ground transportation users rather than to airlines.

This is attractive to airlines because it avoids increasing airline costs and preserves the airport's focus on serving airline operations.

B. CFC in Airline Use Agreement Context

Airline use agreements are contracts between airports and airlines establishing landing fees, terminal rents, and other financial obligations. An important consideration in airline use agreement negotiations is the role of CFCs in airport revenues and financial planning.

If an airport is relying on CFCs to generate a portion of needed revenues (for debt service, operations, capital improvements), the airport may be less dependent on generating revenues from airlines through landing fees and rents. This can be attractive to airlines in use agreement negotiations.

C. Revenue Classification Issues

For accounting and financial reporting purposes, airports must classify CFCs appropriately. CFCs are typically classified as non-airline revenues (revenues not derived from airline activity). This distinction matters for accounting, financial reporting, and potentially for cost allocation purposes.

D. Cost Center Allocation

From a cost center perspective, ground transportation facilities and operations may be allocated costs from other airport divisions or operations. Cost allocation methodology affects the apparent cost of ground transportation and, therefore, the CFC rate necessary to recover costs.

E. Impact on CPE Calculations

Airports often calculate a cost per enplaning passenger (CPE) metric, which is used for comparing airport costs and revenues across airports and for rate-setting purposes. CFCs, as non-airline revenues, affect CPE calculations depending on the specific methodological approach. If CFCs reduce the amount of cost that must be recovered through airline fees, airline CPE decreases.

XI. Transportation Network Companies (TNCs) and Ground Transportation

A. TNC Fee Structures at Airports

As airports have addressed TNC activity, various fee structures have been adopted. Some airports impose per-transaction TNC fees similar to CFCs. Other airports impose facility usage fees or rent on TNC operations. Still other airports impose specific facility fees for dedicated TNC facilities or ground transportation infrastructure.

Some airports have not yet implemented formal TNC fees, treating TNC operations as informal or permissive uses not subject to fees. This approach is likely unsustainable as TNC volumes grow.

B. Comparison of TNC Fees to Rental Car CFCs

TNC fees and rental car CFCs serve related but distinct purposes. Both are charges related to ground transportation services at airports. The magnitude of fees varies. TNC fees at airports that have implemented them typically range from $1-$3 per trip, roughly half the magnitude of rental car CFCs.

The rationale differs slightly. CFCs are justified by the substantial cost of ConRAC facilities. TNC fees are justified more narrowly by the cost of TNC-specific facilities and ground transportation infrastructure used by TNCs.

C. Impact on Rental Car Volumes and CFC Revenue

The growth of TNC services has had measurable impacts on traditional rental car volumes at some airports. As travelers have shifted from renting cars to using TNC services, traditional rental car transactions have declined at some airports, reducing CFC revenues.

The magnitude of the impact varies by airport. At urban airports with strong TNC infrastructure and ridership (such as San Francisco, New York, or Los Angeles), TNC competition has been more severe. At more dispersed, suburban, or less urban-oriented airports, TNC impact on rental car demand has been more modest.

D. Ground Transportation Facility Funding

The growth of TNCs has prompted airports to invest in ground transportation facilities beyond traditional ConRACs. Many airports have developed or expanded dedicated TNC pickup and dropoff areas, short-term parking facilities, and ground transportation infrastructure serving multiple modes.

Funding for these expanded ground transportation facilities comes from various sources: airport revenues, CFC revenues, TNC fees, and sometimes public transportation funding or other sources.

E. Emerging Fee Structures for Autonomous Vehicles

Looking further ahead, airports are beginning to contemplate autonomous vehicles (AVs)—self-driving cars that operate without human drivers. AVs may eventually replace both traditional rental car operations and TNC services, creating a new ground transportation mode and new fee structures.

Airports are beginning to consider what fee structures might be appropriate for AV services and how AVs should contribute to airport ground transportation infrastructure funding. The regulatory and fee treatment of AVs remains entirely unsettled.

F. Integrated Ground Transportation Planning

Progressive airports are developing integrated ground transportation plans that address rental cars, TNCs, taxis, shuttles, and other modes holistically. These plans recognize that multiple modes serve airport users and that ground transportation infrastructure should accommodate and integrate these modes effectively.

XII. Emerging Issues and Future Outlook

A. Electric Vehicle Charging Infrastructure

A emerging issue affecting EV charging infrastructure for airports is the provision of electric vehicle (EV) charging infrastructure for rental cars and customer vehicles. As the automotive industry transitions toward EVs, airports face the need to install charging infrastructure.

ConRACs present an ideal location for EV charging infrastructure, as rental vehicles can charge while waiting for rental or during parking. Forward-thinking airports are installing EV charging in ConRACs and using this as a sustainability feature and competitive advantage.

B. Autonomous Vehicle Integration

As autonomous vehicles represent a significant potential disruption to current ground transportation models, airports are beginning to plan for and integrate AV infrastructure into ground transportation facilities.

AVs will affect both rental car operations and TNC services. Rental car fleets may eventually be predominantly autonomous. TNC services like Uber and Lyft may shift to all-autonomous fleets. The pace of this transition is uncertain but could be substantial within 10-20 years.

C. Sustainability and Emissions Reduction

Many airports have committed to sustainability goals, including emissions reduction targets. Ground transportation is a significant source of airport-area emissions. Airports are using CFCs and ground transportation funding to advance sustainability objectives.

D. CFC Inflation Adjustment Mechanisms

A practical emerging issue is how to adjust CFCs appropriately as facility costs increase due to inflation and facility aging. Some airports have adopted automatic CFC adjustment mechanisms tied to inflation indices.

E. New ConRAC Construction Pipeline

While the period of most intensive ConRAC construction (early 2000s-2010s) has passed, ConRAC construction and expansion projects continue at many airports. Airports that have not yet constructed ConRACs are evaluating whether such facilities would benefit their operations.

F. Post-Pandemic Rental Car Market Recovery

The COVID-19 pandemic severely disrupted rental car demand and CFC revenues in 2020-2021. Recovery patterns have varied by airport size. Some rental car segments (particularly leisure travel) have recovered fully or exceeded pre-pandemic levels.

The post-pandemic rental car market shows some structural differences from pre-pandemic markets. Increased remote work and video conferencing may permanently reduce business travel demand. From a CFC perspective, the post-pandemic rental car market creates some uncertainty about long-term demand trends.

G. Technology Integration (Reservations, Digital Payments)

Technology is advancing rapidly in the rental car industry and ground transportation. Modern reservations systems, mobile apps, digital payments, and integrated ground transportation booking are transforming customer experience.

ConRAC facilities and ground transportation systems are increasingly integrated with digital technology systems, allowing customers to reserve vehicles through mobile apps and pay using digital methods.

XIII. Best Practices

A. CFC Program Establishment

Airports establishing new CFC programs may consider the following approaches: conduct thorough feasibility analysis documenting the business case, obtain necessary state and local authorization, establish transparent documented procedures for rate-setting, engage rental car companies early in the process, establish clear collection and reporting procedures, and obtain bond counsel review.

B. Rate Setting Methodology

Best practices in rate setting include: use cost-of-service approach; incorporate conservative revenue projections; document cost assumptions clearly; incorporate inflation adjustments; establish minimum debt service coverage ratios; and compare to peer airports.

C. Financial Modeling and Projections

One approach is: develop detailed 10-year financial projections; incorporate multiple scenarios; stress test revenue projections; address emerging risks; and update projections regularly.

D. Stakeholder Engagement

One approach is: conduct early outreach; provide transparent information; establish formal processes for rate adjustment; respond to stakeholder concerns; and maintain communication.

E. Bond Structuring

One approach is: establish strong covenants; include additional bonds tests; establish dedicated reserves; obtain favorable ratings; consider insurance and credit enhancements; and obtain bond counsel review.

F. Compliance Monitoring

One approach is: conduct regular audits; monitor debt service coverage; track revenue vs. projections; monitor bond covenants; and update cost allocation.

XIV. Conclusion

Customer Facility Charges have become an integral component of airport finance in the United States, providing dedicated revenues for the development and operation of ground transportation facilities, particularly consolidated rental car facilities. From small CFCs funding basic ground transportation improvements to major revenue sources for ConRAC development at hub airports, CFCs have demonstrated their viability and importance in airport financial planning.

The legal foundation for CFCs is relatively strong, grounded in state enabling legislation, supported by legal precedent addressing airport fee authority, and generally consistent with federal law and federal grant assurance obligations. While CFCs are distinct from the federal Passenger Facility Charges, they operate similarly as dedicated revenue sources for airport improvements.

ConRACs—the primary use of CFCs—have proven to be valuable airport infrastructure investments, delivering significant operational, environmental, and customer service benefits. The successful development of ConRACs at major airports has established the business model and demonstrated that customers and the traveling public value the improved ground transportation experience.

From a financial perspective, CFCs have proven to be bankable revenue streams that can support significant debt issuance for facility development. CFC-backed bonds have financed hundreds of millions of dollars in airport ground transportation infrastructure, and these bonds have generally performed well.

However, CFCs face emerging challenges. The rise of Transportation Network Companies has created competitive pressure on traditional rental car demand and created new regulatory and operational questions. Uncertainty about long-term rental car demand creates challenges for airports that have built ConRACs financed by debt service obligations extending decades.

Looking forward, successful CFC programs will likely be characterized by transparent, documented cost-recovery-based rate-setting; flexible facility designs that can accommodate emerging transportation modes; proactive engagement with rental car companies and transportation providers; sustainability-oriented facility design and operations; diversified funding sources; and integrated ground transportation planning.

For airport finance professionals, bond counsel, rating agencies, and policymakers, understanding CFCs in their full legal, financial, and operational context is increasingly important. This guide provides a foundation for that understanding and equips readers to address the challenges and opportunities that CFCs and ground transportation funding will present in coming years.

Appendix A: Key Statutes and Resources

The following resources provide authoritative guidance on statutes, regulations, and policies relevant to CFCs:

Federal Statutes

• 49 U.S.C. § 40116 (Anti-Head Tax Act): Federal statute prohibiting states and political subdivisions from imposing taxes on air commerce. Link: https://www.law.cornell.edu/uscode/text/49/40116

• 49 U.S.C. § 47107: Federal statute establishing grant assurance obligations. Link: https://www.law.cornell.edu/uscode/text/49/47107

• 49 U.S.C. § 40117 (Passenger Facility Charges): Federal statute authorizing PFCs. Link: https://www.law.cornell.edu/uscode/text/49/40117

Federal Guidance

• FAA Grant Assurances: https://www.faa.gov/airports/aip/grant_assurances

• FAA Revenue Use Policy (1999): https://www.govinfo.gov/app/details/FR-1999-02-16/99-3529

• Airport Improvement Program (AIP): https://www.faa.gov/airports/aip

• Bipartisan Infrastructure Law (BIL): https://www.faa.gov/bil

Municipal Securities

• EMMA (Electronic Municipal Market Access): https://emma.msrb.org/

Legislative Information

• FAA Reauthorization (2024): https://www.congress.gov/bill/118th-congress/house-bill/3935

Industry Organizations

• Airports Council International - North America (ACI-NA): https://airportscouncil.org

• ACRP Report 36 - Airport-Airline Agreements: https://nap.nationalacademies.org/catalog/14577/airport-airline-agreements-practices-and-characteristics

Appendix B: Major ConRAC Projects Summary

Appendix C: Glossary

Selected Key Terms

CFC (Customer Facility Charge): A charge assessed on rental car transactions, typically calculated per day of rental, used to fund ground transportation facilities.

ConRAC: A Consolidated Rental Car Facility housing multiple rental car company operations in a shared facility.

DSCR (Debt Service Coverage Ratio): A financial metric measuring the extent to which net revenues exceed debt service payments.

PFC (Passenger Facility Charge): A federal charge authorized under 49 U.S.C. § 40117, imposed per enplaning passenger, with a maximum rate of $4.50.

TNC (Transportation Network Company): A company providing on-demand transportation services through a mobile app, such as Uber or Lyft.

Revenue Bond: A municipal security secured by specific revenues (such as CFC revenues) rather than general obligations.

Rate Covenant: A bond covenant requiring the issuer to establish and maintain rates adequate to generate specified revenue levels.

Anti-Head Tax Act: Federal statute (49 U.S.C. § 40116) prohibiting states from imposing taxes on air commerce.

This comprehensive reference guide provides detailed analysis of Customer Facility Charges in their legal, financial, operational, and evolving contexts. For additional information, consult with airport finance professionals, bond counsel, or airport authorities.

¹ CFC rate data from airport RFP documents, official statements, and rate schedule filings
² Turo peer-to-peer car sharing and TNC operational data: airport concession agreements and published studies
³ Ground transportation revenue analysis: ACI-NA surveys, airport financial reports, and industry benchmarking

Changelog

FAA Regulatory Resources

The following FAA resources provide authoritative guidance on customer facility charges:

• CGL 2025-02: FAA Guidance on airport revenue use for ground access projects — June 9, 2025, relevant to CFC-funded ground transportation facilities
• Revenue Use Policy — 1999 policy governing CFC revenue as airport revenue

ACRP Research Resources

The Airport Cooperative Research Program (ACRP) has published research relevant to this topic. The following publications provide additional context:

• ACRP Legal Research Digest 45 — "Customer Facility Charge Legal Analysis" (2023). Addresses the legal framework for CFC authority, structure, and enforcement. Note: PDF may not be available; consult the title directly.
• Legal Research Digest 39 — "Ground Transportation User Survey and Demand Analysis" (2020). Documents ground transportation user preferences and willingness-to-pay data from 2020 survey.

Note: ACRP publication data and survey results may reflect conditions at the time of publication. Readers should verify current applicability of specific data points.

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