The American Association of Airport Executives (AAAE) is asking Congress to modernize the U.S. tax code and update the federal cap on local airport user fees.
The request stems from new U.S. Department of Transportation data showing that airlines collected nearly $5 billion in baggage fees last year. Coupled with other ancillary fees, this brought collections to a record $7.6 billion in 201. The news has spurred the AAAE to demand change, arguing that with airlines shifting focus to things like bag fees, investments in airports are falling behind.
“While airlines pile up record fee collections from passengers for so-called ‘optional’ services like taking a bag for a trip, they vigorously fight modest proposals that would upgrade airports and other aviation infrastructure,” AAAE President and CEO Todd Hauptli said. “We can’t meet today’s needs, let alone tomorrow’s, while maintaining a system that fails to take into account changed airline business practices and an airport financing model last updated decades ago. It’s past time for Congress to look past self-serving airline rhetoric and make meaningful changes to boost airport infrastructure investments that directly benefit the traveling public.”
Recent years have seen many airlines increase baggage fees, which continues to push profits higher. However, the AAAE says these same airlines oppose adjusting the federal cap on local Passenger Facility Charges (PFCs) which airports use to finance the construction of new runways, terminals, gates, and other airport improvements. Such fees can only be issued locally, as they must be both justified and used locally on Federal Aviation Administration-approved projects. Their cap hasn’t changed since 2000.
By contrast, bag and reservation fee collections have increased every year for more than a decade. Those fees also are not taxed the same 7.5 percent excise tax applied to base airline tickets, which the AAAE said cost the Airport and Airway Trust fund more than $367 million in potential revenue last year alone. In contrast to the bag and ticket collections last year, the total PFC collection for U.S. airports reached less than half that, taking in $3.5 billion.