Alexandria, VA – With airlines setting another record for baggage fee collections of more than $3.8 billion in 2015, the American Association of Airport Executives (AAAE) once again called on carriers to drop their misguided opposition to modernizing a local airport user fee known as the Passenger Facility Charge (PFC) that finances the construction of new runways, terminals and other airport improvements.
“Another report of record bag fee collections from the airlines and another collective yawn from Washington,” AAAE President and CEO Todd Hauptli said today. “For far too long, policy makers have ignored the staggering disconnect from the airline industry, which is all-too-happy to collect billions in airline-imposed fees destined for their bottom line but fights with all of its political might to oppose local fees that pay to build airport infrastructure and serve the traveling public. Congress needs to see past the self-serving rhetoric from the airlines and act to give airports the tools they require to meet growing needs through an updated Passenger Facility Charge program.”
According to data released today by the Department of Transportation’s Bureau of Transportation Statistics, airlines collected more than $3.8 billion in baggage fees during 2015, the highest amount of any year to date. Airlines collected another $3 billion in reservation change or cancellation fees, also the highest yearly figure to date.
Since 2008, airlines have collected more than $24.8 billion in baggage fees and more than $20 billion in ticket change and cancellation fees. That total of nearly $45 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 or standby passenger fees.
In comparison, last year airports collectively received about $3 billion from the PFC, which is a 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 PFC is not a tax and never goes to the federal Treasury, a fact validated by the non-partisan Congressional Research Service. The PFC is an optional fee that some airports do not charge.
The $6.8 billion in bag and reservation change fees collected by the carriers in 2015 also exceeds the $3.35 billion the federal government provided for the Airport Improvement Program (AIP) in FY 2015 – the same funding level that Congress has approved in previous years. Although airline revenue from bag and reservation change fees has been skyrocketing, airports are trying to finance critical infrastructure projects with an outdated PFC cap and with stagnant AIP funding.
Additionally, 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 more than $24.8 billion in bag fees that are not taxed have cost the Trust Fund almost $1.9 billion in lost revenue. Those are funds that could have otherwise been spent on needed airport and air traffic control upgrades.
