With the U.S. Department of Transportation (DOT) today reporting more than $1.7 billion in baggage and reservation change fees flowing to airlines in the first quarter of 2016, the American Association of Airport Executives (AAAE) once again questioned the continued opposition of U.S. airlines to updating an optional local airport user fee known as the Passenger Facility Charge (PFC) that finances the construction of terminal projects, new runways and other airport improvements.
“Airline baggage fee collections are growing as high as the sun in today’s summer solstice sky, and yet the carriers continue to oppose a modest increase in the local Passenger Facility Charge that would allow airports to better accommodate the record number of passengers crowding into checkpoints and other facilities,” AAAE President and CEO Todd Hauptli said today. “It’s time for Congress to see past airline rhetoric and pass a comprehensive FAA reauthorization bill that prioritizes airport infrastructure investment.”
According to data released today by the DOT’s Bureau of Transportation Statistics, airlines collected nearly $975 million in baggage fees in the first quarter of 2016. That’s up more than $100 million from the same time period last year. The carriers also raked in more than $745 million in reservation change or cancellation fees in the first quarter. Those gains are on top of the record-level $3.8 billion in bag fees and $3 billion in reservation cancellation or change fees that the airlines collected in 2015.
Since 2008, airlines have collected more than $25.7 billion in baggage fees and more than $20 billion extra in ticket change and cancellation fees. That total of more than $45.7 billion in baggage and ticket change fees does not include other airline ancillary charges such as pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees.
In comparison, last year airports collectively received about $3 billion from the PFC, which is an optional charge that must be justified locally, imposed locally and used locally on FAA-approved projects that enhance local airport facilities. The federal cap on the local PFC has not been adjusted since 2000. The $3.8 billion in bag fees airlines collected in 2015 also exceeds the $3.35 billion the federal government provided for airport grants at all eligible airports across the country in FY 2016 through the Airport Improvement Program.
Because bag fees are not taxed at the same 7.5 percent excise tax rate applied to base airline tickets, the Airport and Airway Trust Fund lost $285 million in foregone revenue in 2015 alone. Since 2008, the $25.7 billion in bag fees that are not taxed have cost the Trust Fund almost $2 billion in lost revenue – money that could have paid for airport capital projects and air traffic control modernization efforts.
