Rebutting Delta’s Misleading Statements on PFC’s

Airlines and airports don’t always see eye to eye on the financing of aviation infrastructure. Normally this debate, while spirited, is conducted on a high level. 

BUT…I am reading the article penned by Delta CEO Richard Anderson in the February issue of Delta’s in-flight magazine, Sky. This article sets a new standard for misinformation and misdirection; it cannot be allowed to pass without comment. 

Delta's CEO Richard Anderson once lead Northwest Airlines.

It is hard to know where to begin. So we’ll begin with a statement he makes that isn’t even true. 

In taking aim at the passenger facility charge user fee (PFC) he states:  “Currently, airports charge airline customers $4.50 for every take off and landing.” This is untrue on more than one level. 

First, many airports charge a $4.50 PFC, but many charge $3 and some do not charge one. And it is not on every take off and landing. He knows these things; it is too bad he will not acknowledge them, but rather will mislead Delta passengers (many of whom will read his words while passing time during a delay that might have been alleviated with more investment in airport infrastructure). 

He also never mentions what the PFC is used for. runways, taxiways, terminals, to start. Every dime collected – except what the airlines keep for collecting the fees – goes to projects. Nothing, not a penny, is used to support a bureaucracy or pay an executive bonus (more later on that). The PFC is project-based, and airlines must be consulted on these projects (few ever object, by the way).

In Atlanta, for example, the new fifth runway, which benefits passengers around the country who connect there — and benefits Delta more than any other airline — would not be possible without the PFC. 

The PFC is the most effective and efficient infrastructure financing mechanism in the United States today. Without it, we would have fewer runways and taxiways and terminals would be sorely lacking. Oh, and airlines earn almost $100 million per year for collecting the PFC. 

The PFC also helps foster competition between airlines. Without it, Southwest’s services to places like Detroit, Philadelphia and Baltimore would not be possible, nor Jet Blue in Burlington, nor Air Tran in Atlanta. Hmmm. I think I just figured out why he doesn’t like PFC’s. Like the old New Yorker cartoon said:  “I love free enterprise, its competition I can’t stand”. I guess I can understand why Mr. Anderson’s life would be better without those pesky, profitable, low fare carriers. 

He also seems to lament that air fares have come down during deregulation (as everyone knew they would). If this is a surprise to him, then he wasn’t paying attention. And, of course, that doesn’t account for all those fees you now have to pay.  Airlines made $2 billion in all sorts of fees in the third quarter alone last year. An article in the Feb. 21 Washington Post travel section included this comment by one traveler:  “there’s a fee to pay the fee.” 

A family of four could pay $400 in bag fees alone, sort of puts the $2.50 increase in the PFC limit currently being contemplated by Congress into perspective. God forbid if the family members each want the $8 blanket and pillow too. 

He also laments the government has not fully modernized air traffic control. This one is really amusing to me. In the early and mid-90’s, several commissions, including one I ran, proposed ways to accomplish this. The government made a concerted effort. And it died because the airlines did not support it, they literally didn’t care. A senior executive for Northwest Airlines, when this was proposed, told me straight to my face “we don’t give a sh-t about air traffic control.” Mr. Anderson worked for Northwest back then (no, he was not the one who said that to me). Other airline executives were more polite, but no less pointed. (Northwest thought a change in tax law to put more money in their pockets would have been a better idea. Seriously.) 

Only when several airlines, led by the one Mr. Anderson helped run, got into trouble because of lengthy delays in 1999 and 2000 did the airlines get religion and descend on Washington to blame air traffic control for their problems. I was amused sitting in their audiences, hearing people who told me a few years earlier they didn’t give a sh-t about air traffic control lament that the delays were all the governments fault because the air traffic control system was not up to date. 

I take at face value the airlines’ current interest in the subject, but the fact is that they undercut it when there was a chance to jump start progress and only became interested 10 years ago to deflect criticism aimed at their treatment of their passengers during delays. 

Speaking of customer service, have you noticed that services once provided by airlines, especially during delays and cancellations, are no longer available from the airline?  It is airports that have stepped into this breach. This is a cost that airports have taken off airlines hands. 

Mr. Anderson ends his screed by stating that “…we will continue to fight these tax increases.” What he really means is that he will continue to fight against runways and taxiways and terminals. He will continue to fight against resources for air traffic control and he will continue to fight against competition. 

When Mr. Anderson brought the Delta Northwest merger to a close, it is reported he received a $13 million bonus. Enough to hire a couple hundred flight attendants, by my calculation; an amount equal to four average projects funded by the aviation money in the stimulus package. I wonder how much of that bonus is funded by bag or other fees?  Maybe he figures if there is no PFC increase he might get a bonus this year too?

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4 thoughts on “Rebutting Delta’s Misleading Statements on PFC’s

  1. I found it interesting that Mr. Anderson chose the prederegulation era as the basis of his comparison of the tax burden, a time when the airline business bears little resemblance to what we have today.

    If Mr. Anderson wanted to discuss taxation, he forgot to mention a word about how those extraneous fees for things that used to be included in the overall fare are not subject to the 7.5% excise tax. So whatever revenue they make off those fees, which amounted to more than $1.5 billion for checked bags, is now tax free, thus robbing the taxpayers of revenue to be used to improve the overall aviation system. That’s now more money into the pockets of the airlines’ stockholders and less for the public good.

  2. Greg,
    Any chance you can get some equal space on the editorial page of the New York Times? You said it all…

  3. Thanks Greg. This man needs to be exposed. Richard Anderson is the biggest whiner in business today. Currently he is busy whining about the unions at NWA that he dragged over to Delta, then broke every law in the book hijacking the required elections that ensued. Then he blamed the unions for the entire thing. This man will destroy Delta and I wish the shareholders would get rid of him. The statistics show Delta is the worst airline in the industry. Maybe if Anderson spent more of his highly overpaid time focusing on running a business instead of a political vendetta, Delta would be an airline worth flying.

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