Get ready to pay more to improve US airports
Tuesday, March 07, 2017
Airports and airlines across the United States have been reacting to a new bill put forward by Congress that could increase ticket prices, as a passenger fee cap is lifted for the first time in over 15 years.
Passenger Facility Fees (PFC) are a common way for airports and their operators to raise revenues on top of charges to airlines for every passenger passing through them, whether inbound or outbound. It happens all over the world — sometimes paid by the passenger at the airport, but most often added to the cost of the ticket issued by the airline.
Under the new terms put forward by Congress, airports would be allowed to set their own PFC in accordance with their needs. This could, in theory, see a reduction in the fee. However, it is likely that most airports would raise it as the existing $4.50 cap has been seen as too thrifty for a number of years.
A main proponent for the proposal has been Dallas/Fort Worth International Airport CEO Sean Donohue, who sees it as an opportunity for airports to fund infrastructure projects when the need arises. He stresses that it would not be an automatic increase or a way to unfairly tax passengers.
In the current system, many medium-sized airports that do not meet the required passenger numbers to qualify for the largest funding from PFC collected are not able to undertake larger-scale improvements. However, with the ability to raise their own fees, those airports would be able to put projects into action much sooner.
It had previously been proposed that the $4.50 fee, which has existed since 2000, be increased to $8.50 to meet the needs of improving airport infrastructure improvements at airport across the country, which have been widely criticized as not matching up to the standards of other countries.
With passenger numbers set to grow and airports struggling to meet the demand with current facilities, the ability to charge passengers a fee that matches the need could bring improvements at a quicker pace. Rep. Thomas Massie, R-Ky., said during a Transportation panel hearing on March 1: "We are not increasing the PFC," adding, "We are giving [airports] the freedom to do whatever [they] want."
Seattle-Tacoma International Airport is also in favor of removing the cap and raising the PFC charged, as it sees the pot stretched too thinly when it has so much infrastructure need. Sea-Tac managing director Lance Lyttle told the House of Representatives, "Without higher PFC authority, our debt service on the bonds to fund master plan projects will flow directly into the airline rate base and likely driving the cost to airlines at Sea-Tac to the highest in the nation."
However, Seattle-based Alaska Airlines joined the ranks of many airlines opposed to any increase in facility fees, fearing it would put off customers with the inevitable hike in ticket prices.
The airline is a member of Airlines for America (A4A), whose senior vice president of legislative and regulatory policy, Sharon Pinkerton, commented, "PFC collections are nearing record levels set in 2006 while airlines are still carrying fewer passengers than they did in 2007." She added, "This is not a revenue issue; there are more than adequate funds. This is a revenue grab, for which airline passengers should not be liable."
President Trump has also expressed his lack of support for raising fees that would hit passenger ticket prices, despite being vocal about the poor state of many of America’s airports.
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