Airlines set a new record this past year, reaching $7.5 billion between baggage and ticket fees collected in 2017 and prompting the American Association of Airport Executives (AAAE) to press for a local airport user fee.
Broken down, airlines collected almost $4.6 billion in baggage fees and another $2.9 billion in reservation change and cancellation fees. In terms of baggage, this represents a $400 million increase from 2016 according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.
However, while airlines are benefiting the AAAE points out that due to bag fees not being taxed at the same 7.5 percent tax rate as base airline tickets, airports lost out on $343 million in potential revenue in 2017 alone, which could have been used for airport and air traffic control upgrades.
They also argued that local Passenger Facility Charges (PFCs) have not been adjusted since 2000. These PFCs finance construction of runways, terminals, gates and other airport improvements.
“With infrastructure investment high on the agenda in Washington, it’s time for Congress and the administration to see past the self-serving and contradictory rhetoric of the airlines and remove the federal strictures on local passenger facility charges that continue to hamper airport development,” AAAE President and CEO Todd Hauptli said.
The AAAE is asking airlines to drop their historic opposition to such an increase. It would be justified, imposed and use locally on various FAA-approved projects for local airport improvements. As the airlines made $7.5 billion last year, airports received under $3.3 billion from the PFC.