To the Contrary, Airlines Are Not Over-Regulated

I saw the article in Friday’s USA Today Business section about increasing regulations on the airline industry. 

What I found interesting about it is that nearly all the rules come under the heading of consumer protection. One airline executive states that they are the most regulated de-regulated industry in America. 

I would argue, instead, that most industries are just as heavily regulated as to how they treat customers. What would happen if a company produced a toy that broke half the time?  Or a frozen pizza that sickened people a large percentage of the time?  But a flight that is chronically late (a product that is chronically faulty) was never subject to any sanction, or even disclosure, till recently. 

I would have preferred that these things could have been addressed without rules. Airlines had the chance to do that when they made several customer services promises in 2000. They didn’t follow through and now face the regulatory music. 

(ACI-NA on Thursday filed comments generally support DOT’s efforts to expand passenger rights.) 

Airports have absolutely no interest in airlines being in financial trouble or in their being over-regulated. Airports, and the communities they represent, lose service when airlines are under pressure. But we recognize, unfortunately, that these issues would not have been addressed without regulation. And, we commit to working with airlines to serve our passengers and reduce the impact of those regulations on service.

Next Airline Fee Target: Our Runways

Just read a story that said U.S. airlines made $2.1 billion just from ancillary fees and just in the second quarter of this year alone!!!

Wow. That is an impressive number. Wonder what the Southwest Airline Bag Fee cops (those commercials are a riot, by the way!) think about that? Of course, Southwest ranks second in fees collected; they don’t have bag fees but do have other fees.

$2.1 billion. Man. I keep thinking about the great line from the Southwest anti-bag fee commercial (“$120 in fees roundtrip. 150 people on the plane. That’s almost $20,000, street value”).

I have often said that if airlines want to charge for their product in this way that’s their right. But I have also said that the fact that most of these fees are not subject to the ticket tax that funds the trust fund that supports air traffic control and infrastructure development is a serious policy issue that must be addressed (either we change the way the trust fund is supported or we change the way such fees are treated). As must the fact that more people carrying bags onto planes to avoid the fees means longer backups at security.

Let’s see, $2.1 billion (in one quarter) times four equals $8.4 billion. Hmmm. Almost exactly equal to what the International Air Transport Association predicts the global airline industry will make in profit this year. Hmmm. (No word yet on what airline executive bonuses will be this year).

And the people who have compiled this record have the temerity to oppose U.S. airports from increasing the passenger facility charge user fee by a measly $2.50! (And let’s not even get into the fact that the PFC helps support airline bottom lines by avoiding having to increase a carrier’s rate base. And why is the federal government so involved in what airports can charge as a user fee anyway????)

I have been told by multiple folks around town that lobbyists who work for certain airlines are bragging openly that they are on the verge of killing the FAA reauthorization bill. I’ve been around here a long time. The airlines are the only industry I have EVER encountered that so consistently argue against what are their true long term interests. And this is one of those times. And some of them are BRAGGING about it!!

But as long as they can collect $2.1 billion every quarter, who cares? Who needs runways, taxiways and terminals? Who needs a modern air traffic control system? Can’t collect ancillary fees off those things!

FAA’s Airport Office: Thanks for the Jobs You Created

I went over to the FAA today to meet with Kate Lang, Acting Associate Administrator for Airports. Debby McElroy, our Executive VP for Policy and External Affairs, came along. This is a regular meeting we have scheduled to discuss a wide variety of issues we are working on.

When the meeting ended, Kate asked us if we would come with her to a gathering of all the employees in the Airports division in D.C. and also, via phone, those around the country. The meeting was called by FAA Administrator Randy Babbitt to congratulate the Airports folks for the outstanding job they did in moving stimulus money out the door and putting it to work. I was honored to be asked to come along and even more honored to be asked to say something.

“Day in and day out,” I said, “the FAA Airports office works hard to ensure the safety and efficiency of the air transportation system and, in so doing, make it possible for people to travel and business to be completed. In the past year, they have done an absolutely marvelous job of getting the stimulus act money out the door.” Finally, I reminded them that the purpose of the stimulus was to create jobs and that by getting that money out the door; they helped make it possible for thousands of families to have work and support themselves.

There is a lot of argument these days over how to create jobs, what works and what doesn’t. What we do know is that the airport initiative in the stimulus did work and did create jobs.

FAA Bill Creates Today’s Jobs; Infrastructure Bank Creates Tomorrow’s Jobs

I’m reading a new biography of Henry Clay (Henry Clay:  The Essential American, by David and Jeanne Heidler; I recommend it).  One of Clay’s big ideas was federal support for what were then called “internal improvements;” what we call today “infrastructure.” 

By coincidence, last night I read the portion of the book that discussed a proposal made after the War of 1812 to use dividends from the then-Bank of the United States to finance internal improvements.  What one might call, an Infrastructure Bank.  I say “by coincidence” because yesterday, the president announced a series of infrastructure proposals that included an Infrastructure Bank.  

I applaud the president for focusing on infrastructure, and for including airports in his proposal.  Aviation is often forgotten in these kinds of announcements.  But, in reality, for aviation, and for the country, the best thing the president and Congress can do is work to pass the FAA Reauthorization Bill that has already been passed in different forms by both houses of Congress.  Both bills contemplate an increased federal grant program for aviation infrastructure.  Most importantly, the House bill also contemplates an increase in the Passenger Facility Charge user fee cap by $2.50.  NOTHING would do more to put people to work (125,000 annually by our estimation) and improve our aviation infrastructure than passing this bill into law.  And, it does NOT increase the federal deficit. 

Jobs and the deficit are the big political issues this year.  FAA Reauthorization, with the PFC cap increase, is the only bill I know of that aggressively attacks both. 

The Infrastructure Bank may be a good idea; we’ll await the details.  But we KNOW what the FAA Reauthorization Bill will do.  Pass it now!

Delta Admits Its Baggage Fee is a Burden

Watching CNN prior to the Iraq address by President Obama, I saw a commercial for the Delta Sky Miles American Express Card. 

The narrator asks:  “Can your card save you bag fees every time you fly?  My card can.”  The narrator then goes on to state that getting this credit card will save a family of four $200 on a roundtrip ticket in bag fees. 

There you have it, an airline acknowledging to the burden of its fees on travelers and using relief from them as a way to sell a credit card! 

And yet…..the very same airline fights the effort to increase by $2.50 the anachronistic limit placed by the federal government on a fee an airport can impose to build needed infrastructure, create jobs, relieve pressure on the federal deficit.