Airlines Push Back on Higher Passenger Fee

DALLAS - An airlines group is stepping up its campaign against a proposed 90% increase in the federal fee collected by airports to fund facility improvements with a new website seeking support from air travelers.

At the website, www.StopAirTaxNow.com, which was unveiled on March 5, Airlines for America contends that airports do not need the additional revenue that would be generated by raising the cap on passenger facility charges to $8.50 per trip segment from the current $4.50.

"The fact is that there isn't a crisis in airport funding," Airlines for America said. "U.S. airports are well-positioned to address capital needs and have the revenue streams they need for future improvement projects."

The Beyond the Runway Alliance, a coalition of airport groups and transportation associations, asked Congress in January to raise the cap on the PFC to $8.50 in new reauthorization legislation for the Federal Aviation Administration. The airport group said the additional revenue is needed to help fund $7 billion of capital improvements each year not covered by current revenues and grants.

The current FAA authorization will expire at the end of fiscal 2015 on Sept. 30.

The PFC has been capped at $4.50 per flight segment and a maximum of $18 per connecting roundtrip since 2000. Each of the 338 eligible U.S. airports sets its own fee, which is collected by the airlines.

Top executives at seven large U.S. air carriers said that airports do not need a higher PFC in a letter that they sent last week to the chairmen and ranking Democrats of the Senate Commerce, Science, and Transportation Committee and the House Transportation and Infrastructure Committee.

Airports collect $2.8 billion in PFCs a year as well as $10 billion in airline rents and fees, $8.2 billion in non-airline revenues, and $3.4 billion from the FAA's airport improvement program, the executives said.

"If airports need more money, they can easily utilize the bond market to raise revenue," the airline executives said. "With investment-grade credit ratings, airports can obtain inexpensive financing, which is a much better alternative than increasing taxes on passengers."

The letter was signed by chief executive officers at Alaska Airlines, American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, and United Airlines.

Todd Hauptli, chief executive officer of the American Association of Airport Executives, said inflation over the past 15 years has reduced the value of the PFC to $2.50 in real terms.

The additional $4 would generate $2.5 billion a year, he said. In comparison, FAA records show that passenger numbers grew even as airlines in 2013 collected more than $3.35 billion of baggage fees and $2.8 billion in reservation changes.

"The fact that the airlines are collecting increased amounts of revenue from $25 bag fees and $200 change fees while passenger levels continue to rise undercuts the specious argument that a modernized PFC would have a dramatic impact on passenger demand," Hauptli said.

The additional $4 fee would generate $2.5 billion a year, he said

The FAA said last month that PFCs brought in $2.78 billion in fiscal 2014, with expected revenues of $2.87 billion in 2015 and $2.89 billion in 2016.

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