AAAE Says Bag And Ticket Charges Have Reached A Record Level

With airlines collecting nearly $1 billion from baggage fees alone in the second quarter of 2015 - a new record high - the American Association of Airport Executives (AAAE) has once again questioned the opposition of carriers to updating a local airport user fee known as the Passenger Facility Charge (PFC) that finances the construction of new runways, terminals and other airport improvements.

"It's groundhog day...again. The airlines continue to oppose self-help for airports while helping themselves to billions of dollars in bag fees and other ancillary charges," AAAE President and CEO Todd Hauptli said Monday. "With the federal government on the verge of a possible shutdown and with the path forward for a long-term FAA bill far from certain, it's time for Congress to reject airline rhetoric and provide airports with the certainty and flexibility they are seeking to address growing infrastructure needs through a modernized PFC program."

According to data released today by the Department of Transportation's Bureau of Transportation Statistics, airlines collected more than $962 million in baggage fees in the second quarter of 2015, the highest amount of any quarter to date. Airline reservation change or cancellation fees also reached another new high with $772 million collected in the second quarter of 2015. Airlines have collected more than $3.3 billion in bag and ticket change fees in the first half of 2015, which follows a record $3.5 billion in bag fees and another $3 billion in reservation cancellation or change fees collected in 2014.

Since 2008, airlines have collected more than $22.8 billion in baggage fees and more than $18.6 billion extra in ticket change and cancellation fees. That total of more than $41.4 billion in baggage and ticket change fees does not include other airline ancillary charges such as pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees.
 
In comparison, last year airports collectively received less than $2.8 billion from the PFC, which is a charge that must be justified locally, imposed locally and used locally on FAA-approved projects that enhance local airport facilities. The federal cap on the local PFC has not been adjusted since 2000. The PFC is not a tax and never goes to the federal Treasury, a fact validated by the non-partisan Congressional Research Service. The $3.5 billion in bag fees airlines collected in 2014 also exceeds the $3.35 billion the federal government provided for airport grants at all eligible airports in FY 2015 through the Airport Improvement Program.
 
Because bag fees are not taxed at the same 7.5 percent excise tax rate applied to base airline tickets, the Airport and Airway Trust Fund lost $265 million in foregone revenue in 2014 alone. Since 2008, the $22.8 billion in bag fees that are not taxed have cost the Trust Fund more than $1.7 billion in lost revenue.
 
Hauptli discussed AAAE's support of closing the bag fee loophole at a Senate Commerce subcommittee hearing earlier this year. Hauptli told lawmakers that the foregone revenue from bag fees could help pay for airport infrastructure projects and air traffic control modernization.

Hauptli discussed AAAE's support of closing the bag fee loophole at a Senate Commerce subcommittee hearing earlier this year. Hauptli told lawmakers that the foregone revenue from bag fees could help pay for airport infrastructure projects and air traffic control modernization.

FMI: http://www.aaae.org/