How can airlines say “No” to PFCs increases with a straight face?

A news story crossed my desk today stating that U.S .airlines, IN THE THIRD QUARTER ALONE, made nearly $2 billion from bag fees, change fees, and other ancillary fees.  And this number DOES NOT INCLUDE such items as fees for pillows and blankets, food and drink, seat selection and entertainment options.  When you add all that in, the number is well over $2 billion.  IN JUST ONE QUARTER. 

The airlines earned $740 million on just baggage fees in the third quarter.

Now, I have no quibble with airlines pricing their product as they see fit; though this does raise serious policy questions since the aviation trust fund that supports a lot of aviation infrastructure projects, including air traffic control, depends upon revenue from the ticket tax and most, if not all, of these fees are exempt from that.  So, we do need to take that into account and airports stand ready to work with airlines, general aviation and others to figure out how to address this challenge.  But, if they want to sell their products in this way, that’s fine, I suppose.

That, of course, leads me to think about the proposal in Congress to allow airports to increase the Passenger Facility Charge (PFC) user fee airports charge, by as much as $2.50.  A fraction of what is charged for bags, for example.  (Full disclosure, we support increasing the limit on the PFC user fee by $3 and indexing it for inflation).  Here is how most rationale people would think airlines should respond to our proposal: 

“This is a great idea.  We don’t have enough infrastructure, delays are far too common, and if we ever fix air traffic control all that investment will go down the drain if we don’t have enough runways, taxiways and terminals.  Terminal space for our precious passengers is far too limited in too many cases, and we need to expand that.  Many terminals are older, and they should be modernized, after all the convenience and needs of our passengers are our foremost concern.  And projects financed by the PFC, including the bonds that are backed by the PFC, reduce our rates and charges by tens of millions, even hundreds of millions of dollars at many airports around the country – and that goes right to the bottom line.  PFC user fees are project based, so they don’t support bureaucracies.  Airports are a primary and critical piece of our assembly line and they need to work for our passengers.  This is a great idea – how do we support this?” 

BUT, here is how many (not all) airlines respond:  “This is a terrible idea.  Every dollar in the passenger’s pockets belongs to us, and we are determined to siphon every last one out.  We need to find more fees to charge (that Ryannair guy’s idea for a potty fee sounds interesting…).  WE want to control how much infrastructure is built – and we DO NOT want enough for our competitors.  Passengers don’t care if they have to sit on the floor in outdated, overcrowded terminals; it helps them appreciate the limited leg room we give them at the back of our planes.  Airports should be nothing more than four walls, a ceiling and some doors (a former airline CEO actually did say that to me, in exactly those words).” 

This should be a no-brainer.  Members of Congress in both parties support this PFC user fee increase.  We can build the 21st century infrastructure we need, create tens, even hundreds of thousands of jobs, all at no cost to the federal budget and all while saving the airlines money directly off their bottom line.  Let’s hope 2010 brings us, finally, to the point where Congress passes an FAA reauthorization bill with a PFC increase, indexed to inflation, so that we can get to work building and modernizing the infrastructure we need.

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