AAAE's Chip Barclay Responds to the Airlines' Whining ...

… about the impact of various fees on ticket sales. Target No. 1 for the airlines is the proposed increase in the cap on passenger facility charges (PFCs), under consideration in Congress and vehemently opposed by the carriers. Barclay, the long-time president of the American Association of Airport Executives, has a history of taking a low profile and delegating the role of expressing the organization’s positions through his well-qualified staffers. Thus, when Chip makes the point of presenting an industry position, it is worth noting. In a recent opinion piece in the Aviation Daily – a newsletter via which many policymakers and legislators in D.C. get their aviation news – Barclay tries to clear up the airline industry’s practice of “Confusing Sin Taxes and Fixed Costs”. It’s a must read … and can be found at www.aaae.org (Press Release section). A few excerpts … “Most of the airlines' calculation is made up of fees charged for facilities and services other industries consider fixed costs for plant and production lines. Local airport PFCs can only be used for capital aeronautical improvements at airports served by the airlines, or the airlines' equivalent of other industries' ‘plant.’ The federal ticket tax and segment fee go almost entirely to running the FAA and the air traffic control system, the airlines' equivalent of other industries' ‘production line,’ and a grant program that also is restricted to federally approved, aeronautical development at airports (more plant).”  “… one of the few places they enjoy an advantage over other industries is precisely in the area of fixed capital costs for plant and production lines.” “… in the airline business, local governments provide the plant (airports) and the federal government provides the production line (ATC) -- both at cost, without profit, and using tax-exempt financing as an added bonus.” This week American Airlines announced a new customer service approach, allowing customers to pay yet another fee – this time to move up in the boarding queue just after priority boarding. That means that for a few dollars more, passengers can make sure they get on board quickly enough to stash that luggage that they didn’t want to have to pay to check. Then there’s Spirit Airlines’ proposal to charge passengers for carry-on bags, which has just about everyone shaking their heads and asking, “What the … ?” While boarding at O’Hare this week I watched a family of five, obviously headed for their vacation, check in with their array of bags. I recall thinking … Do you suppose the Dad who just used his credit card to pay for all that baggage handling ever even thought about what he is paying in PFCs, which of course make much of the terminal facilities the family will use possible? Probably not. One can rest assured, however, he’s going to remember all those “airline” fees the next time he books the family trip. Thanks for reading. jfi