How should airports treat passenger facility charges?

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Passenger facility charges (PFCs) are fees that airports collect from passengers using the airport's facilities. They are intended to fund specific airport projects that enhance safety, capacity, and security, ultimately leading to improved service for travelers. Given this context, the proper classification of PFCs is as nonoperating revenue.

Nonoperating revenue refers to income that is not generated from the primary operations of the business. Since PFCs are imposed on passengers and not originated from core airport activities such as ticket sales or concession revenues, they are categorized accordingly. Instead, PFCs are auxiliary to the airport's operations, akin to other forms of external funding or income derived from activities that are not part of primary operational transactions.

Additionally, treating PFCs as nonoperating revenue distinguishes this source of funding from operating revenue, which is typically linked to daily operational activities. This classification allows for a clearer picture of the airport's operational performance separate from external financial inflows and supports accurate financial reporting aligned with accounting standards.

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