Are Passenger Facility Charges the Answer to Airport Funding Problems?
I’m not sure if there is another industry that has started to nickel and dime its users more than aviation. Some of these charges have already been implemented, and others have simply been proposed. Airlines are now charging for food, checked baggage, and even for carry-ons in some cases. Recently most of the major airlines also increased their flight change fees to $200, which was the same amount I paid for my last round-trip ticket in the first place.
Despite all of these new fees, and the simultaneous reduction in service, the airlines are still doing quite well. Like many other industries, airlines will likely continue to increase fees and charges as much as the market will bear. With the debatable success of all of these fees it is reasonable to question if airports couldn’t benefit from increasing these fees themselves.
In the past airports have relied heavily on the Airport Improvement Program (AIP) in order to fund major improvements like new runways, taxiways, or terminals. However, as the cost of these improvements has increased there has not been a coinciding increase in funds. Airports are having to get creative with ways to fund the projects they need because this previous source just isn’t cutting it.
One of these income sources are Passenger Facility Charges (PFC). PFCs are currently capped by Congress at $4.50 but there is an increasing number of supporters trying to get that cap lifted. The airports themselves are one of the biggest supporters of lifting the cap, but groups like AAAE are also lobbying hard to make this a reality.
I don’t know if PFCs are necessarily the answer, but it is time to give airports more ability to support themselves. Congress has shown their complete ineptitude when it comes to pretty much anything, but especially when it comes to budgets and funding anything. They need to get out of the way of the people who know how to fix problems and take care of their needs.
Whether it is PFCs or some other source, it is clear that airports need more funding to support their needs, let alone their wants. What do you think, should Congress lift the cap on PFCs, or is there another way for airports to raise the money they need?
I don’t think that it ultimately matters to the consumer. If the airports need money, they’re going to get it, and that cost will undoubtedly trickle down to the passenger. Even if the airports have to raise cash through their last resort (charging their tenant airlines more for ramp/gate leases), the airlines will recoup that money through ticket prices. Doing it through taxes is just their preferred way of doing it because it’s more of a “hidden” cost.
In the airline industry, perception is everything. People would be happier customers if their ticket cost $200 with $75 in fees and taxes than if their ticket cost $250 with $25 in taxes. It makes no sense, but it’s how it works. I forget the airport, but there was one getting complaints from passengers that they were waiting for their baggage too long at the claim. The airport just moved the claim further from the terminals so that it took people longer to walk to it. Their perception was a shorter wait time, and complaints went down.
Gotta be a frustrating industry to work in when you have to deal with stuff like that!
That is ultimately what happens with anything in the aviation industry, the consumers pay for it. Naturally, the airlines want to keep the fees as low as possible so that they can keep overall cost down, but ultimately they don’t care if the airports raise costs because they will just pass it on to passengers, and they can just blame the airports for the fees. In some places it really i ridiculous though. I bought a ticket from London to Amsterdam once and the total ticket price was about $80, of which $68 was taxes and fees.
Perception is everything in aviation, which is why I am so surprised by the path airlines have taken when it comes to all of these fees. If they just charged an extra $20 people wouldn’t be as put out as they are by paying that same $20 to check a bag, get food, tv, etc. Obviously the decision makers are far more educated than me in the industry, but look at the success Southwest is having by not charging for bags. Their fares are no longer lower than most, but they are super successful because they don’t charge for bags, or to make changes to your flights, two things that other airlines continue to increase.