Proposed New Charge Would Pay for Improvements at Houston's Hobby Airport

March 24, 2006
Passenger Facility Charges, known as PFCs, are new to Houston but are used at airports throughout the country.

Mar. 23--Travelers moving through Houston's Hobby Airport soon may have to pay $3 every time they fly in or out to help pay for airport improvements.

If approved, the fee could be in place by year's end.

The proposed new charge comes at the behest of Southwest Airlines, which carries most of the passengers at Hobby, although other airlines there also will levy the fee.

Passenger Facility Charges, known as PFCs, are new to Houston but are used at airports throughout the country.

"We approached the airport about instituting a PFC," said Bob Montgomery, vice president for properties at Southwest. "It is a head tax that goes on the tickets, and it is very common in airports across the U.S. There are only a small handful of airports that don't charge it."

Along with Hobby, Houston's George Bush Intercontinental Airport is one of the few major airports in the country without such a fee. Dallas' Love Field is another.

No such fee is in place at Intercontinental because Houston-based Continental Airlines is against it for competitive reasons. Many of the travelers there are flying in from other cities to make connecting flights, and might shift to other carriers if they had to pay an added fee.

Congress approved the charges in the early 1990s because of worries that airport construction nationwide wasn't keeping up with airline traffic growth, said Rick Vacar, director of the Houston Airport System.

The added fee at Hobby is needed to help pay for capital improvements at the city's second-largest airport.

The ultimate cost of the work is far higher than originally expected, but Vacar takes issue with the description of cost overruns. He said the work was estimated at $85 million many years ago. By the time the design was done and changes requested by airlines were included, the cost grew to $330 million.

"Did the project grow from $85 million? Yeah," Vacar said. "But it is 16 years later."

The renovation of the central terminal at Hobby was completed last year. Now, a five-gate expansion is under way, and the old Concourse A still has to be demolished.

Anthony Hall, the city's chief administrative officer, said Wednesday that the scope of the renovations under way at Hobby has grown .

"So it is fair to say some of the increased costs are cost overruns," Hall said during a Houston City Council meeting. "But some are because we have changed or rescoped what is to be done."

The Passenger Facility Charge already has been recommended by the council committee overseeing aviation. But the item was tagged Wednesday, effectively delaying action for a week.

If approved by council, the matter would go to the Federal Aviation Administration, which likely would issue a ruling within eight months.

Councilwoman Pam Holm, who has raised concerns about the fee, noted Wednesday that the change would raise the price of a round-trip ticket by $6, which "is significant."

Councilman Michael Berry, who heads the council committee recommending the revision, emphasized that Southwest is requesting the charge.

"Southwest Airlines has a franchise with Hobby Airport, and we have to build buildings for them and maintain runways for them, and we charge them for that," Berry said. "One way or another, they have to compensate us for services we provide to them. But I think this is the right thing to do, given our circumstances at this time."

Continental said Wednesday it opposes a similar fee at Intercontinental because it would drive away business. It notes there is a big difference in terms of the passengers using the airports .

Most of Hobby's passengers are local, Continental spokeswoman Julie King said, while 65 percent of the passengers moving through Intercontinental are connecting from somewhere else.

"We've been really successful" at financing improvements through bonds, King said. "It comes out of our pocket either way. We just think bonds is better."

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