"Chicago wants big hike in ticket tax for airports"

Wednesday, March 28, 2007

Chicago wants big hike in ticket tax for airports
By Paul Merrion
Crain's Chigago (IL) Business


Chicago is joining other cities in pushing for a big increase in the ticket
tax that goes to airport operators. 

Under federal law, airline passengers now pay a passenger facility charge
(PFC) of up to $4.50 every time they take off. The revenue can be spent
locally on airport safety, security, increased capacity or noise reduction. 

To offset proposed reductions in other federal airport improvement funding,
the Bush administration wants to increase the maximum PFC to $6. 

That "is a step in the right direction, but it does not go far enough,"
Chicago Aviation Commissioner Nuria Fernandez said Wednesday at a hearing of
the U.S. House of Representatives aviation subcommittee. "We recommend that
the Congress set the PFC cap at $7.50 and index it to inflation." 

Since it was first enacted in 1990, at $3 per takeoff, "inflation and the
dramatic rise in construction costs have contributed to the erosion of the
PFC's original impact," she added. In 2000 the maximum was raised to $4.50,
which would be $7.20 today if adjusted for inflation. 

Ms. Fernandez noted that reliable and adequate federal funding is needed to
increase capacity at O'Hare International Airport, which is projected to see
53 million departing passengers by 2020, up from 37 million last year.
Midway Airport's passenger load is expected to nearly double by then to 16.3
million enplanements. 

But Ms. Fernandez came out against an airport congestion management proposal
by the Bush administration that would allow the Federal Aviation
Administration to impose measures to reduce delays at certain airports, such
as higher fees for flights during peak travel times. 

"Market-based mechanisms such as congestion pricing schemes or auctions can
be anti-consumer, anti-competitive and can hurt the ability of the airport
to control the pricing for its landing fees," according to her prepared
statement, which she summarized for the panel. "The city requests that the
airport retains control over any congestion management program and that
proceeds from the program go directly to the airport for use in capacity
enhancing projects." 

Big airports that generate a lot of PFC revenue would come out ahead under
the trade-off proposed by the Bush administration, according to the U.S.
Government Accountability Office. But many House Democrats are concerned
that smaller airports are likely to be worse off than before. 

"We need to continue to look at PFCs in terms of the bigger funding picture
and how PFCs fit into that," says Rep. Dan Lipinski, D-Chicago. "I've not
come to a position yet on increasing PFCs."

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