A desire to see facility improvements and better accommodations for travelers is a subject on which airports and airlines can agree.
When it comes to funding those projects, however, the two entities have trouble finding common ground. The opposing viewpoints were on display this week during an industry workshop at Bill and Hillary Clinton National Airport/Adams Field in Little Rock.
For the American Association of Airport Executives, an easy funding fix could be found in raising the passenger facility charge (PFC) included on the price of airline tickets. Fees are charged for passengers who board at the airport where their trip originates and the federal government currently caps the amount at $4.50.
Todd Hauptli, CEO and president of the American Association of Airport Executives, said during the workshop that his organization is in favor of increasing the cap to $8.50, which would generate billions in additional funding for airports. Passenger facility charges are used to help fund facility upgrades like the planned $17.6 million concourse renovation at Clinton National.
"An increase is overdue," Hauptli said. "Fourteen years later the purchasing power of those PFCs has eroded dramatically."
Airlines balk at the idea of a fee increase for several reasons. They would like additional input into how the money is spent, and no revenue is generated for their bottom line as a result of the passenger charges.
"At the end of the day, from the airline perspective, either we or our passengers are paying for this," Will Ris , American Airlines senior vice president for government affairs, said when addressing workshop attendees. "What we really find very important is that we have a seat at the table and decide what is in the best interest of the carriers and the airport."
Clinton National collects about $4 million worth of the fees annually. About $2.25 million in fee collections are projected for Northwest Arkansas regional airport this year.
Airports are required to seek approval from the Federal Aviation Administration when spending the money collected from passenger facility charges. Under the 1990 law that made the collection of the fees possible, airports are allowed to put the funds toward "projects that enhance safety, security, or capacity; reduce noise; or increase air carrier competition."
When first implemented the fees were capped at $3. An increase to $4.50 was permitted in 2000.
An increase in the fees would take congressional action, something that seems unlikely over the next year, but is worth pushing for, Northwest Arkansas Regional Airport Director Kelly Johnson said. Johnson said airport advocates pushed for an increase in the most recent federal transportation bill, but they did not succeed in getting them included.
Johnson said a compromise might include raising the limit on the passenger fees with a percentage set aside for airlines. Whatever portion is divvied up to the carriers could be used for upgrades to air traffic control towers and airplanes.
"Congress is being lobbied very, very hard by the carriers not to let this happen," Johnson said. "I'd love to see it next year. We tried to get it in the bill before. We tried real hard and made absolutely no headway."
Passenger facility charges generate about $3 billion annually, the bulk of which go back to the airports. By contrast, airlines generate $3.5 billion in revenue from bag fees.
No taxes are collected on the bag fees charged by airlines. Instituting a 7.5 percent federal tax would generate $253 million annually that Hauptli said could be earmarked for airport traffic control technology improvements, airport construction and other infrastructure-related projects.
"When the airlines impose a baggage fee, it leaves this community," Clinton National Director Ron Mathieu said. "The PFCs stay in this community.
"It's important we are doing what we can to keep as much money in this community as possible," he added. "It's our job to make a positive economic impact. ... They want to use the facility for nothing. This is where we get into friction, a little give and take."
Clinton National will fund its upgrades from existing revenue but is projecting about 95 percent of the costs will be recouped from the facility charges.
Airports have managed to find ways to do infrastructure improvements, either through current fees or bonds. Private investment also has funded projects.
Because of that resourcefulness, there is no sense of urgency at the federal level for raising passenger finance charges, Hauptli said.
"They have done a remarkably good job, maybe even too good of a job, in figuring out creative ways to fund infrastructure investment," Hauptli said during his presentation.
Business on 09/18/2014