Airlines Have Finally Found A Fee They Don't Like

UNITED STATES - NOV 29:  Nicholas Calio top lobbyist is being named head of the Air Transport Association (the airlines lobby
UNITED STATES - NOV 29: Nicholas Calio top lobbyist is being named head of the Air Transport Association (the airlines lobby). (Photo By Douglas Graham/Roll Call)

WASHINGTON -- Passengers are used to paying extra airline fees to carry on bags, cash in rewards miles, make same-day changes to flights and print boarding passes. So it may come as something of a surprise that airlines are intensely lobbying against a $4.00 increase to a routine fee that airports charge passengers to fund infrastructure upgrades and other improvement projects.

The fee, called the “Passenger Facility Charge,” generates nearly $3 billion each year for airports. Currently, the fee is capped at $4.50 per flight, but airports say that cap, which was set in 2000, no longer carries the same purchasing power. Pointing to recent decreases in federal funding through the Airport Improvement Program, airports say the limit should be raised to $8.50 and indexed to inflation when Congress reauthorizes the Federal Aviation Administration next year.

On the other side of the issue are airlines, which are working hard to prevent the fee from going up, as they did before the last FAA reauthorization in 2012. That reauthorization took five years and required more than 20 temporary funding extensions.

Airlines for America, a trade organization of major U.S. airlines, says that a fee increase would be an undue tax that would depress demand for air travel. The group argues that the airports have sufficient resources to fund their projects and that travelers already pay enough in special taxes and fees.

Sharon Pinkerton, a senior vice president at Airlines for America, told The Huffington Post that the debate over raising the PFC was based on a disagreement over how airports should fund infrastructure upgrades.

"There’s not a single project out there that you can point to and say ‘airlines are standing in the way of that getting done,'" Pinkerton said. "The disagreement is over which pot of money should be used. All we’re saying is, ‘You’ve got a lot of other pots of money.'"

But airports are pushing back by arguing that Airlines for America isn't in a place to talk about fees, given the multitude of charges airlines levy on passengers.

“Airlines for America has been really hyperventilating about increasing the PFC. I think a lot of [congressional] staff are really rolling their eyes at the hypocrisy because obviously the airlines have not met a fee they couldn’t figure out how to put in their pocket,” a Republican lobbyist who represents airports and their executives told HuffPost.

“The airline industry has been a little duplicitous -- they hide behind fiscal responsibility when it suits their purposes,” added the lobbyist, who declined to be named due to sensitive political relationships.

Unlike, say, the battle over raising the federal minimum wage, the issue of raising the PFC is interesting in that it doesn’t easily break down along partisan lines. Airlines are saying that the fee is an unnecessary tax on consumers, an argument that could appeal to conservative sensibilities. But the airports are responding with a different argument that's also couched in conservative, free-market rhetoric: New funding for infrastructure projects is a local control issue, they say, and a hike in the fee would allow airports to rely less on federal funding. Airports would be able to fund more gates and foster more competition, which could bring down flight costs for passengers.

“The PFC is essentially a nonpartisan issue -- it represents investing in our infrastructure,” said George Kelemen, a senior vice president at Airports Council International. “It’s the most free-market, local control option for funding infrastructure and not having to rely on federal money -- that’s music to many conservative Republican ears.”

The issue hasn't raised much partisan debate on Capitol Hill ahead of the FAA reauthorization. A spokesman for Rep. Peter DeFazio (D-Ore.), a senior Democrat on the House Subcommittee on Aviation, pointed out that the congressman had been an early sponsor of the initial PFC. The fee would be up for consideration in the reauthorization debate, the spokesman added, though he declined to indicate whether the congressman would advocate for raising the PFC.

President Barack Obama called in his last budget request for the cap on the fee to be raised to $8.00, an increase that would fall slightly short of the $8.50 cap that airports want.

Airports are also making the case that reductions in federal grant money have forced them to put off longer-term projects. Many airports say that their current PFC user fees are committed to repaying borrowed money well into the future, and that as a result they have limited flexibility to fund new projects.

Joel Bacon, a spokesman for the American Association of Airport Executives, said he was optimistic that efforts to raise the PFC would prevail. He pointed to recent comments by Rep. Bill Shuster (R-Pa.), chairman of the House Transportation and Infrastructure Committee, who said that the next FAA funding bill should be “transformational.”

“It hasn’t been a process that has been conducive to do anything beyond nibbling around the status quo,” Bacon said.

Greg Walden, a former chief counsel to the FAA who now lobbies for airports, returned to the issue of hypocrisy to make the case on behalf of his clients.

“[A PFC increase] is dwarfed by the ancillary fees airlines are charging,” he told HuffPost. “I don’t begrudge [airlines] the money they’re making, but if passengers are used to paying for a $7.00 meal and a $25 or $50 bag charge, then how is a $4.00 increase going to depress demand?”

“I just don’t think it’s credible for airlines to say they’ll lose passengers if the PFC goes up,” Walden said.

But Pinkerton, who insisted that airlines are "working hand in hand with airports to get infrastructure built," rejected the hypocrisy argument.

"There’s a difference between charging someone directly for an optional service and a PFC, which is not optional," she said. "We consider a government-imposed tax much different than an optional fee."



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