Burgers, Politics, and PFCs

I’m back in Champaign after visiting Peoria and Springfield earlier this week (a real pleasant surprise:  the sunset as you come out of the Burger Barge restaurant in Peoria; looking over the Illinois river with the city of Peoria on the far shore and the sunset behind it. One of the nicest sunsets I’ve seen).

Both airports had stimulus projects either completed or underway (lots of stimulus projects on the highways between Virginia and here, and on the highways of central Illinois too). I’ve often said that the airport provisions of the stimulus (the grant money AND the AMT waiver on airport bonds) are among the most effective and efficient provisions of that legislation. You can see that with your own eyes out here.

The Peoria Skyline overlooking the Illinois River at dusk

While traveling here I’ve been actively plugged in to developments surrounding FAA Reauthorization. I am amused that several airline CEO’s wrote a letter urging its passage even after they have spent months trying to kill the bill. It is disappointing that the bill has been de-railed, for now. Interesting timing.

Perhaps the most interesting development so far is the piece put out by Senate Republicans on the Commerce Committee and they way they describe the PFC user fee.

Passenger Facility Charge (PFC)

• The House bill included an increase to the maximum allowable PFC from $4.50 to $7.00 per flight segment.  The Senate compromise proposes allowing a $1.00 PFC increase, maximum PFC to $5.50 per takeoff.
• Airports use these fees to fund FAA-approved projects that enhance safety, security, or capacity; reduce noise; or increase air carrier competition.
• PFCs are local fees in lieu of taxes dedicated to capital projects needed at local airports.  Unlike a federal tax, only users pay PFCs.  PFCs are not collected by the federal government, not spent by the federal government and not deposited into the federal treasury.  Decisions on whether to impose a PFC are determined locally.

I couldn’t have done a better job myself except for the fact that they proposed an increase in the cap to just $5.50 rather than $7.

I have visited three airports on this trip, to go along with many others. Most airports were originally built decades ago, and much work remains to be done to bring our national aviation infrastructure up to date (an engineering group that grades US transportation infrastructure recently gave aviation a “D”).  The PFC is the most effective, efficient and conservative transportation funding mechanism used anywhere in America today. Conservative leaders should be its most outspoken supports and some are.

Bob Poole, Director of Transportation Studies, Reason Foundation recently wrote, “some are quibbling over whether the PFC is a user fee or a tax. It is definitely not a federal tax, and since the funds are raised and spent by individual airports, for project(s) on that specific airport, and only for a time period sufficient to pay for the FAA‐approved project(s), in my book that is a user fee, not a tax.  But for conservatives, the for more important argument is that the PFC program is an excellent example of exactly the kinds of devolution most conservatives and most Republican favor.”

And Paul Weyrich, in 1999 as the chairman of the Coalition for Americans, urged Congress at the time not to cap PFCs, noting that local communities should have the prerogative to set this local fee.

A FAA Reauthorization Bill, with a PFC user fee limit increase and a strong airport improvement program, will create tens of thousands of jobs and have no impact on the federal deficit. It is the best jobs bill on the radar screen today. It is a bill any incumbent of either party should be dying to run on.

As I reported last time, it will play in Peoria!

Does It Play in Peoria?

I’m writing this from Peoria, Illinois. I’ve been in the region for a few days, specifically Champaign, Illinois visiting family and Jacksonville, Illinois attending my wife’s family reunion. (Jacksonville is the hometown of Ken Norton, former heavyweight champ, by the way. He was in town for a birthday celebration and to be honored by his hometown.)

After all that I went to St. Louis to drop my sons at the airport for their trip home and met with Rhonda Hamm-Niebruegge, the new airport director there. Rhonda worked for TWA and American before coming to the airport and she’s doing a great job.

Sunset at Peoria International Airport

I drove back up to visit Peoria International where tomorrow I will see Gene Olsen, the director here and then to Springfield to see Mark Hanna, the director there.

All this time driving past cornfields has given me a lot of time to think about the continuing struggle to pass FAA Reathorization. And events like reunions give you a lot of chances to answer questions like:  ”What are you working on?”

Unlike inside the beltway (where I live and work), people don’t follow every last development in Washington with baited breath. But I can tell you that they do think FAA Reauthorization is the basic business of government and should be done. They can’t figure out why it hasn’t been done.

I can also tell you that when I describe PFCs it makes perfect sense to them. A mechanism that funds necessary infrastructure that is paid by users and doesn’t add to the federal deficit makes a lot of sense out here. And I defy anyone who disagrees with them to explain an alternative.

Congestion Pricing, PFCs and Blogging

Earlier this week, I was interviewed by Paul Plack of the Aero-News Network to get the airport’s reaction to the July 13 federal court decision which upheld a Transportation Department rule that gives airports the flexibility to use congestion pricing as one tool to reduce flight delays. 

Download the ANN Podcast.

 In the interview, I also explained that the airlines position on raising the ceiling on the maximum Passenger Facility Charge to $7 just doesn’t make sense. He noted that that the airlines are better off financially when capital improvements to an airport are financed by PFC-back bonds instead of including the costs of the improvement into the airline’s rate base. 

During the course of the interview, Paul also asked me about blogging so I shared some thoughts on writing this column over the last two years. The bottomline, I enjoy blogging and especially enjoy your feedback.

A Victory for Airports and Passengers, Visiting Virginia, and Remembering a Yankee Legend

There was an important court case decided last week. It didn’t get much attention in the general press, but was pretty big news in the aviation trades. And it was great news for passengers around the country.

You see, in 2008 the US Department of Transportation issued rules on airport rates and charges. The rules clarified that airports can charge a two-part landing fee based on whether or not a flight was coming at a peak time. This makes sense, after all the airlines price their product the same way (as was pointed out in the opinion). Airports must still base their charges on the overall rules set by the government; they can’t just charge whatever they want, whenever they want. But airports can use rates and charges to manage their own airfields and provide incentives to reduce congestion.

This just makes sense, but for some reason the airline industry took the DOT to court over this matter. The arguments were made back in October, but the decision just came out last week. I’m an old soccer player:  if this opinion was a World Cup match it would not have been a 1-nil win, but a 4-nil win. Airports, the DOT – AND common sense – won on all counts. But really, this was not a win for airports so much as it was a win for passengers. And, in the long run, I think a win for airlines too, though they don’t think so right now.

Also, late last week two of our staff and I visited the airports in Newport News, Virginia and in Norfolk, Virginia. These are both well-run, well-managed airports that provide high levels of service to their communities and to their airlines. Both have extensive low fare service and offer beautiful facilities. Both have plans for the future – and leaders in place that can make them happen. It was really great to have a chance to see their work first hand and to spend some time with them. The best part of this job, I think, is the time I get to spend at airports with our members around the country, in Canada, and around the world.

The old Yankee Stadium, circa 1955.

A final note:  When you get to be a certain age, you look back on life and there are certain voices that stick out; voices that serve almost as the narrators of your life. One such voice for me was Bob Sheppard, longtime public address announcer for the Yankees and (football) Giants who died the other day at age 99. I bet I saw several dozen Yankees games in the old Yankee Stadium when I was a kid (I mean the pre-1976 Yankee Stadium, that thing they tore down a year or so ago was NOT the old Yankee Stadium, though I did see some games there too). I know I saw several dozen Giants football games over the years, at Yankee Stadium, the Yale Bowl and Giants Stadium. The constant was Bob Sheppard. I am old enough to have heard him, in person, announce Mickey Mantle, Yogi Berra and Whitey Ford. I heard him announce Joe DiMaggio, in person, at several Old Timers Games. I heard him say “pass by (Y.A.) Tittle” and “tackle by (Lawrence) Taylor.” And there are so many other great names in both sports I heard him announce over so many years, it would take me an hour to list them all. It is a voice I will never forget (and he looked a little like my late father-in-law too, which added to the effect for me). Bob Sheppard. RIP.

Airlines Appetite for New Fees is Out of Balance

I was driving this afternoon on the way to an appointment and turned the radio on to get the top national news. The #1 story?  Airline fees. How expensive they are, and how confusing they are to the traveling public. 

The reason this was the top story was a congressional hearing held today on the subject of airline fees. The Government Accountability Office has produced a report on the topic and we have worked closely with them on this. There will be lots of stories on this hearing, check them out: 

• Associated Press: Airline fees make best deals hard to find, watchdog group says
• Wall Street Journal: Lawmakers Consider Taxing Airlines’ Fees
• Wall Street Journal: Does a Fee Equal Fare at Airlines?
• Bloomberg: U.S. Airlines May Be Forced to Widen Fee Disclosure

I have stated before that if, as a matter of business, airlines want to raise fares this way then fine, as long as the consumer is protected and informed. I have also said that there are public policy considerations to address, including the fact that fare increases done through fees contribute nothing to the aviation trust fund (which funds air traffic control and infrastructure improvements) as well as the fact that these fees ($120 roundtrip to check two bags for example) mean that more people are carrying bags on, which puts added burden on TSA checkpoints and slows the travel process. These are issues that should be addressed. 

I have also written that while airlines have looked for new fees to add (bag fees and the new peak travel fee could add $720 to the cost of a roundtrip for a family of 4), they have fought airport efforts to be permitted to assess an additional $2.50 passenger facility charge user fee. 

House Aviation Subcommittee Chairman Jerry Costello, as he often does, put it best in his statement:  “while the airlines protest vehemently about any increase in the $4.50 passenger facility charge that airports use to fund infrastructure projects, they have a seemingly unlimited appetite to charge their own fees.  This is a relationship that is out of balance.” 

Well said, Congressman Costello! 

Take our survey:
Airlines Fees: To Tax or Not?

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Small Airports, Mandates and United Airlines

The opening title sequence of the Mary Tyler Moore Show is memorialized in bronze in downtown Minneapolis.

Just returned from Minneapolis where we held our annual small airports conference.  We had a good group of directors and other senior staff from small and non-hub airports in the United States and Canada, discussing and debating many of the important issues they face on a day-to-day basis.  The Minneapolis airport folks, especially CEO Jeff Hamiel and Mitch Killian who runs their government affairs shop, did a great job hosting us and showing us the best Minneapolis has to offer; including a boat ride on Lake Minnetonka. 

We hold a number of issue-oriented meetings throughout the year.  The larger airports can send dedicated staff to those meetings, but smaller airports are not always able to do so, in fact many do not have staff dedicated to one topic.  So, we conceived this conference as a way to touch on the wide variety of issues small airport directors must deal with on an ongoing basis.  This year’s meeting focused on such topics as the new customer service rules, information technology, web content, security, Next Gen and other such topics.  It is also a good chance for directors of these airports, and their senior staff, to get together with their colleagues to network, share best practices, ask questions and so on. 

We also had joined us for a two hour discussion two airport members of the Future of Aviation Advisory Commission, established earlier this year by Transportation Secretary Ray LaHood.  Sue Baer, from the Port Authority of New York and New Jersey, and Raul Regalado, from Nashville, flew in for the day to meet with the airport directors, hear their concerns and participate in an exercise designed to identify policy priorities for the group.  Issues such as air service were a key focus, but the issue that really dominated the discussion was the growing list of regulatory unfunded mandates.  This will be a major focus of ours going forward, it is a special concern of the smaller airport directors, and you will hear more on this topic in the weeks and months to come. 

Before closing, I should note the response my blog last week on my experience in the United Red Carpet Club in Chicago.  A couple of comments were posted, even more comments came directly.  I fly United a lot, and my experience is overwhelmingly positive; indeed, the flight and cabin crews on my flight from Chicago back to Washington last Friday night did a great job when our departure was delayed – we got good information and we were served drinks while we waited (in the end, passengers mostly want good information and some basic necessities in such instances). 

I should also note that Kevin Knight, a Senior Vice President at United for Planning, attended the Small Airports Conference and delivered a speech on the pending United/Continental merger and its potential impact on air service, and answered questions.  Alissa Markert came with him and spent a great deal of time speaking to attendees (she and I also chatted about the blog, very civil and constructive which I certainly appreciated – when I went to the Business Center to print my boarding pass she was in there and even printed it out for me).  She’s an excellent representative of United Airlines. 

No, I’m not backing off the earlier post, and I hope the word will go out and others will reply to customers a little differently the last time.  This is just a recognition that one incident does not a company make and, despite my frequent criticisms of airlines for some of their policy positions and for their overall record on customer service, I have also in the past given credit to airlines and their employees when I see them doing the right thing in my travels.  And, yes, I am still glad I had those two little kids as my guests and, no, I don’t think that will contribute to United being in any danger of bankruptcy.

Airlines Play the Blame Game and United’s Not-so-Red-Carpet Treatment

I’m writing this while sitting in the United Red Carpet lounge at O’Hare waiting for my flight to Minneapolis to attend our Small Airports Conference. I’m sitting in a group of people from everywhere watching the Germany-Spain World Cup semifinal. Another example of the airport as the new global town square.

Two airline-related items recently caught my eye:

First is the story of several airline CEO’s blaming government for their companies’ troubles. Blaming the government is fun and it is easy. Most people want to believe the government is wrong, so it is also an easy way to deflect attention from any role you might have played in creating your own problems.

The United Red Carpet Club at O'Hare International.

But I find this a little rich from an industry that accepted $5 billion and a loan guarantee program after 9/11; an industry that loves government protected special treatment on international routes when it can get such protection; an industry that has asked for more than $6 billion from Uncle Sam to pay for air traffic control equipage and an industry that lobbied me when I ran that presidential commission years ago in a futile attempt to get us to recommend a series of tax breaks and handouts. I just find it interesting.

The second thing just happened here. I was entering the club and a family was ahead of me. The father’s status did not entitle him to bring his (entire) family in with him (he has small children). So I offered to have some of them as my guests (I was entitled to two). The fellow at reception in a very serious tone accused me of contributing to the bankruptcy of United Airlines. It wasn’t a joke, but a serious comment.

I hope that was an isolated incident (the cabin crew on my flight into ORD was terrific by the way), but it was not a way to win friends and influence people.