(No) Taxes and Tolls and Fees, Oh My—Going Down the Yellow Brick Road (Runway)
Industry conferences are time-weathered rituals of opening speeches, presentations, mass-produced meals and corporate exhibit halls. And they quite often provide invaluable nuggets of networking, insight and the occasional eye-opening session where participants actually forego the Powerpoints and are brutally honest.
At this year's annual American Association of Airport Executives meeting, held in Phoenix, an April 30 late-afternoon session featured reps from three four airlines: United, US Airways and Southwest. And in that 90-minute discussion, there were jeers, boos and dramatic flourishes not often associated with an industry not known for eloquence or outspokenness (by industry, I mean transportation, not just airports).
The issue at the core: Passenger Facility Charges, which have remained capped at $4.50 for years, much in the same way as the federal fuel tax. U.S. airport operators want it raised to $7 (a raise found in the Administration's aviation reauthorization proposal, but not the Senate's and probably not the House's to come). The raise (which really needs to be over $8 just to keep up with inflation and basic infrastructure needs, says AAAE), is staunchly opposed by airlines.
At this year's annual American Association of Airport Executives meeting, held in Phoenix, an April 30 late-afternoon session featured reps from three four airlines: United, US Airways and Southwest. And in that 90-minute discussion, there were jeers, boos and dramatic flourishes not often associated with an industry not known for eloquence or outspokenness (by industry, I mean transportation, not just airports).
The issue at the core: Passenger Facility Charges, which have remained capped at $4.50 for years, much in the same way as the federal fuel tax. U.S. airport operators want it raised to $7 (a raise found in the Administration's aviation reauthorization proposal, but not the Senate's and probably not the House's to come). The raise (which really needs to be over $8 just to keep up with inflation and basic infrastructure needs, says AAAE), is staunchly opposed by airlines.
(Update to clarify: In February, a new 4-yr FAA authorization bill was signed into law. It has no change in the $4.50 PFC cap. Though airport officials certainly want to see an increase in PFCs, it’s highly unlikely that this issue will be reopened any time soon...maybe not until this 4-yr bill expires. Courtesy of colleague Tom Ichniowski)
The airline reps did make some very valid arguments, pointing out their razor-thin margins and asking airports to realize that while their capital plans have 10 to 20-year horizons, airlines must adjust to evolving financial realities constantly, or on the fly, as it were (my pun). They pushed for capital plans that involve the ability to make incremental upgrades as needed, rather than an "all-or-nothing" approach to building airport infrastructure.
But when an airport operator in the audience pointed out that no matter how few or many flights an airline operates out of his facility, it's up to the airport to maintain that facility, US Airway's DJ Anderson said: "That's why it's important for you to stop relying on airline revenues for your bread and butter." And Gavin Malloy of United said: "We as an industry (airlines) are the most taxed in a nation...we're taxed as if flying were a sin. I don't believe our customers or ourselves are responsible for the infrastructure."
This didn't sit well with the airport folks. Another audience member retorted: "How is a PFC equivalent to death, taxes and sin?", challenging the airline reps to justify their own fee increases, i.e., checked bag fees, standby/changed flight fees, and so on. Malloy said: "Our fees are all optional." That's where the audience began to laugh derisively.
But Steve Sisneros of Southwest made a great point: "We are at opposite ends [on this issue] in lobbying Congress...but whenever an industry is divided, it is punished." Presenting a united front, he noted, will make Congress take notice.
This is exactly what highway advocates have been saying.
What if that united front were for transportation in general—highways, transit, ports, and airports?
Can this industry despite the internal squabbles and rivalries ever present a united front, making the case that investing in a road, airport, port or transit system means better quality of life, better economic advantage and yes, jobs? Can this industry be not like Congress?
The airline reps did make some very valid arguments, pointing out their razor-thin margins and asking airports to realize that while their capital plans have 10 to 20-year horizons, airlines must adjust to evolving financial realities constantly, or on the fly, as it were (my pun). They pushed for capital plans that involve the ability to make incremental upgrades as needed, rather than an "all-or-nothing" approach to building airport infrastructure.
But when an airport operator in the audience pointed out that no matter how few or many flights an airline operates out of his facility, it's up to the airport to maintain that facility, US Airway's DJ Anderson said: "That's why it's important for you to stop relying on airline revenues for your bread and butter." And Gavin Malloy of United said: "We as an industry (airlines) are the most taxed in a nation...we're taxed as if flying were a sin. I don't believe our customers or ourselves are responsible for the infrastructure."
This didn't sit well with the airport folks. Another audience member retorted: "How is a PFC equivalent to death, taxes and sin?", challenging the airline reps to justify their own fee increases, i.e., checked bag fees, standby/changed flight fees, and so on. Malloy said: "Our fees are all optional." That's where the audience began to laugh derisively.
But Steve Sisneros of Southwest made a great point: "We are at opposite ends [on this issue] in lobbying Congress...but whenever an industry is divided, it is punished." Presenting a united front, he noted, will make Congress take notice.
This is exactly what highway advocates have been saying.
What if that united front were for transportation in general—highways, transit, ports, and airports?
Can this industry despite the internal squabbles and rivalries ever present a united front, making the case that investing in a road, airport, port or transit system means better quality of life, better economic advantage and yes, jobs? Can this industry be not like Congress?
A united front makes a lot of sense and even if complete<br/>unification can't be achieved, commonalities can be identified. For example presently it is an absolute disgrace<br/>that pu...
May 8, 2012
A united front makes a lot of sense and even if complete
unification can't be achieved, commonalities can be identified. For example presently it is an absolute disgrace
that public address messages are not intelligible to the hearing impaired whose hearing aids not function well in a noisy and echoing environment. That problem has been solved and is in extensive use overseas but cost considerations have ruled it out here. Hearing "loops" can be installed in transportation places of public assembly with more rational allocation of funding - for example a relative lot of funding could go to "hub" airports where there is not much time to make connections or a terminal railroad station with multiple tracks. As experience is gained in installing the systems, regardless of the transportation modality, costs will come down.
Incidentally the Unions realized the advantages accruing from a common front many years ago when the "skilled Labor" AFL and "common Labor"merged to
form the AFL _CIO.
unification can't be achieved, commonalities can be identified. For example presently it is an absolute disgrace
that public address messages are not intelligible to the hearing impaired whose hearing aids not function well in a noisy and echoing environment. That problem has been solved and is in extensive use overseas but cost considerations have ruled it out here. Hearing "loops" can be installed in transportation places of public assembly with more rational allocation of funding - for example a relative lot of funding could go to "hub" airports where there is not much time to make connections or a terminal railroad station with multiple tracks. As experience is gained in installing the systems, regardless of the transportation modality, costs will come down.
Incidentally the Unions realized the advantages accruing from a common front many years ago when the "skilled Labor" AFL and "common Labor"merged to
form the AFL _CIO.
