Air Transport World

Capacity: plus ca change. (the capacity crunch will remain despite passenger- facility charges) (includes related article on attempts to increase airport capacity)

PFCs may provide the wherewithal for airport upgrades but without ATC improvements, the capacity crunch will remain.

To hear U.S. government and industry tell it, the Aviation Safety and Capacity Expansion Act, signed last November, is a magic wand that will resolve U.S. aviation's worst capacity ills. Transportation Secretary Samuel Skinner calls it "the most significant piece of aviation legislation since deregulation." Airports say the act's lifting of the head-tax ban offers some financial independence from airlines, increasing capacity and competition. Carriers say it gives them a long-sought national noise policy that permits more-rational service and equipment choices.

But neither the act nor the regulations required to implement it, nor the claims made for it are so straightforward. No one has suggested that the law itself has kinship to snake oil but the suggestion is that its implementation may.

Airports have wanted to charge head taxes-now delicately known as passenger-facility charges (PFCs)-ever since such charges were banned in 1973. Until last year, the airlines had fought them successfully by raising fears that PFC revenues wouldn't be used properly.

Airports remained dependent on airline and concession revenues to finance their plans, plus the occasional federal grant from the Airport Improvement Program (AIP) funded by existing ticket taxes. While unhappy, most continued to sign long leases that gave airlines control over airport capital decisions ATW, 12/88).

What was a bad arrangement before deregulation turned into a lousy one after 1978. Hub-and-spoke systems and consolidation left many airports even more beholden to fewer carriers. If a carrier agreed to airport expansion, it was to suit its own purposes, not to help local users or the overall transportation system. Meanwhile, passengers complained about high fares at monopoly or near-monopoly airports.

As a result, the American Association of Airport Executives and the Airport Operators Council International reignited the head-tax campaign. They established a close relationship with Secretary Skinner. They showed how well their scheme meshed with the Bush administration's goal of placing more of the tax burden on state and local governments and Skinner's desire to expand capacity. The fact that the city of Chicago pushed PFCs hard to build its new airport, and that Skinner is from Chicago, helped immensely.

Even with Skinner's support, few thought PFC legislation would pass. But wrapped up in an end-of-year miracle package, it was adopted. Senate Aviation Subcommittee Chairman Wendell Ford (D-Ky.) switched positions to support PFCs in a deal to tie it to airline-pushed national-noise policy legislation that airlines said also will expand capacity. Completing the main package was an airport-backed law setting deadlines for banning Stage 2 aircraft.

While they were at it, Congress added a section requiring that DOT come up with a slot-allocation plan for high-density airports that encourages competition. The PFC rules can't go into effect until FAA has issued noise and slot rules.

Even simple legislation becomes complex in the hands of lawyers. The PFC law is not simple. Lawyers, consultants and financial advisers have hopped on what appears to be a long gravy train of work to interpret the statute and related rules.

While happy with the new source of funds, airports had major gripes with FAA's proposed PFC rules, due to become final early this month. First, they wanted to be able to use PFC revenues as their matching share of funds for AIP grant projects. Second, they wanted FAA to reduce PFC red tape, which FAA copied from the onerous AIP process. Mark Perlis, whose law firm does work for the city of Chicago, says: "The PFCs were supposed to be airport-driven, not driven by [federal] regulation." Third, airports wanted to make sure that PFC-backed bonds would be as marketable as the airport revenue bonds they now use. …

Log in to your account to read this article – and millions more.