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May 19, 2013

Are Passenger Facility Charges the Answer to Airport Funding Problems?

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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?

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March 26, 2012

Hilton Head Airport Finds a Solution In Place of User Fees

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The debate over user fees has calmed somewhat since the initial release of the 2013 budget that wants to include them.  While user fees will likely become more of an issue as the actual passage of the budget comes up, it is important to look at what other options there may be in place of user fees.

At the Hilton Head Airport in South Carolina they were able to create a solution to prevent user fees but still increase revenue for the county.  The specific numbers of the deal can be found in this article from IslandPacket.com.  What I like about the situation is that the parties involved were able to get together to find a mutually beneficial solution.

That is the problem that I have with user fees in general: supporters seem to think that user fees are a quick fix for a problem that is much more complicated than just money.  They are not willing to put forth the time and effort to come up with real solutions, they just want more money.

This solution may not work at other airports, but if the airports, FBO’s, and cities/counties would all just sit down and work together they could come up with systems that would provide the necessary funds without overburdening anyone.  Of course we must also consider the FAA and federal government, but they should be no different.  Instead of looking for a quick fix for a long-standing problem, do some work and come up with a solution that everyone can be okay with.

Few will argue that there are not financial concerns when it comes to aviation in general, and air traffic control in particular, which should also mean that people can be reasonable when it comes to developing solutions.  Like most government programs it likely needs to be a tightening of belts along with an increase in revenue, but what we definitely don’t need is a short-term fix for a long-term problem.

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February 16, 2012

Rep. Mike Pompeo Explains Very Simply Why User Fees Are Bad for America

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User fees seem to be the simple answer for so many people in Washington who have no real understanding of what general aviation does for this country.  They think it is all about rich people cruising around in their big expensive jets on vacation, and while those people do exist, the vast majority of general aviation is in support of business both big and small.

Rep Mike Pompeo of Kansas is a long-time advocate for general aviation.  That is not too shocking seeing as how he comes from Wichita, KS which is home to companies like Cessna, Learjet, and Beechcraft; as well as being the birthplace of Air Force One.  He gives a great response to President Obama’s proposed budget which includes user fees for general aviation.  Here is the video:

 

 

Like so many types of regulation in this government, user fees will hurt the little guys.  Big companies write off fees like this as nothing, or they find a loophole to get out of paying them entirely.

A better idea for funding aviation is to create a more efficient system that doesn’t throw away money on things like replacing the uniforms for all of TSA for millions of dollars.  There are plenty of areas where cuts could be made, or money could be generated, but the people making decisions are too clouded by their own special interests.

What type of an impact do you think user fees would have on an already struggling industry?

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User Fee Debate Overshadows FAA Reauthorization Bill

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It is amazing how something so good can happen at the same time as something so dumb.  On Tuesday, President Obama signed into law the FAA Modernization and Reform Act of 2012 which provides four years and $63.4-billion in funding for the FAA.  This follows 23 short-term funding bills over the past five years.

All of the experts applauded this action as it provides a certain amount of stability for an organization that has been in limbo for half of a decade.  Most people overlook the fact that the lack of funding for the FAA has also meant a lack of funding for a lot of very important airport development projects.

The irony of the situation is that just the day before, on Monday, President Obama released a budget that included user fees of  $100 per flight as well as increasing the passenger security fee from as low as $2.50 to as high as $7.50 over the next 6 years.  This increase could cause very serious issues for an industry that is still struggling in a variety of ways.

It is amazing to me that you could do something so detrimental the day before doing something so valuable.

The first concern is obviously money.  Aviation companies, both commercial and business, are struggling to make ends meet in any way that they can.  Commercial airlines will not be affected quite as much since they will simply pass the fee on to the passengers which they won’t really notice either since the $100 per flight will spread out to less than a dollar for most flights.

The security fee will be worse, but again, airlines will pass it along to the passengers, and with the high price of tickets most people will simply write it off.  But I know that I for one am tired of paying more and more for plane tickets.

Bigger business aviation companies will also not feel the pinch nearly as much since $100 really isn’t that big of a deal when you are dropping tens of thousands of dollars on fuel for every trip.  The real pain will be felt by the little guys who have less of an impact on fuel purchases, but who are responsible for a much larger portion of the total flights.

These smaller jets routinely purchase only a few hundred dollars worth of fuel because that is all they need.  They also fight tooth and nail to not pay landing fees at FBO’s because even $50 more for each flight makes a huge difference to their bottom line.  Having worked at an FBO I have seen how hard these guys fight for every dollar, because they have to.

Now they are proposing that these users pay an additional $100 for each and every flight, if they fly in controlled airspace.  Talk about a gray area.  Even people who teach aviation have a tough time defining what exactly controlled airspace is.

Does that mean that every little single-engine prop is going to have to come up with an extra $100 for every flight when they are only spending $50 on fuel?  But this becomes a much bigger issue than just money.

If the choice is between paying $100 and simply flying VFR instead of IFR, then what choice are most of these little guys going to make?  A lot of them are flying short legs anyways, so how hard is it to just fly VFR?  The vast majority of passengers won’t even realize that their safety is at risk as opposed to being under the control of air traffic controllers.

They use the excuse that aviation needs to pay for its own security, which in principle I don’t have any problem with.  The problem that I have is that the government continues to impose new rules and regulations and then expecting users to just eat the costs.  In reality, how much safer are we now than we used to be?

My own personal feelings about TSA will have to wait for another day, but the point is that the government once again feels that throwing money at a problem will be a solution despite all of the evidence to the contrary.  Look at most government-funded programs and you will see that money is generally not the real issue.

So, while I am ecstatic that the FAA is now funded for a period that will allow some serious work to take place on NextGen ATC, and a bunch of other badly needed development, I hate to see that the government is asking for even more of a sacrifice from an industry that is already struggling.  Pretty much every sector is struggling, and they all need to make changes and pull their own weight, but the changes to these fees simply is not the answer.

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January 17, 2012

Aviation User Fees are One More Bad Idea to Lower the Deficit

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User fees in aviation seem to be the bad idea that will never go away.  For as long as I have been associated with aviation I have heard talk of user fees hitting the industry.  The current proposal from the White House calls for a $100 per-flight fee to help lower the federal deficit.

For those not familiar with the industry that may not seem like a huge deal, and it isn’t, for the major airlines who will simply pass on the fee to their customers which works out to practically nothing per passenger.  For general aviation users $100 could easily be a large percentage of their overall costs.

Supporters of the fees argue that everyone using the system should pay their fair share, but I guess that all depends on your definition of fair.  Currently the air traffic control system is funded largely by taxes on fuel that are substantially higher for general aviation users than commercial airlines.

The following excerpt from an article at aopa.org gives great insight into the current system and what really should be considered fair.

Paying the 21.9-cents-per-gallon tax on noncommercial jet fuel, operators of a Gulfstream IV business jet would pay about $87 in fuel taxes. The commercial jet fuel tax is 4.4 cents per gallon; even with a much higher fuel burn, operators of an Airbus A320 would pay about $68 in fuel taxes.

It doesn’t take a rocket scientist to figure out that general aviation aircraft are already paying their fair share.  Unfortunately it appears that the people who are making the decisions don’t seem to understand the industry.

The aforementioned article also points out the ambiguities in the wording of the proposal which further shows the lack of true understanding by the authors.  I’m sure it is not really surprising to anyone that a government proposal would be filled with ambiguities, but it has to call into question the proposals validity.

User fees don’t appear to be a reality in the immediate future, but they also don’t appear to be going completely away.  Having used the current air traffic control system I totally agree that getting the NextGen system up and running is of the utmost importance, but doing it at the expense of the people who use and support that system just doesn’t seem to make sense.

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