AAAE Urges Congress to Update PFC Program to Unlock Local Investment in Airports around the Country

As airline bag fee collections continue to rise – to a record-high $1.5 billion in the third quarter of 2019 – the American Association of Airport Executives (AAAE) called on Congress to adjust the arbitrary and outdated federal cap on local Passenger Facility Charges to spur investments in the nation’s airports that will directly benefit passengers.

Todd Hauptli

“For most of us, Christmas comes only once a year, but for the airlines, bag fees mean that every day of the year they get to open a new present from the traveling public,” said AAAE President and CEO Todd Hauptli. “Congress should finally approve an adjustment to the PFC cap so that Santa and his reindeer aren’t the only ones who don’t have to worry about where to land this holiday season.”

According to data released today by the Department of Transportation’s Bureau of Transportation Statistics, airlines collected more than $1.5 billion in baggage fees during the third quarter this year, breaking a record set in the previous quarter. Through the first nine months of the year, airlines have collected more than $4.3 billion in bag fees, putting them on pace to shatter the record-high $4.9 billion in baggage fees charged in 2018 – a year in which many carriers increased their fees for the first checked bag by $5. Airlines collected another $739 million in reservation change and cancellation fees in the third quarter after raking in $2.7 billion in ticket fees last year.

Although airlines have increased their bag fees and continue to collect record amounts of ancillary fees from their customers, they remain opposed to adjusting the federal cap on local PFCs, a user fee 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. Due to increased construction costs since then, a $4.50 PFC is worth just over $2 today, which hampers infrastructure development opportunities at airports around the country.

Bag and Ticket Fee Facts

  • Airlines collected more than $2.2 billion in baggage and reservation change fees in the third quarter of 2019 – an average of more than $24 million in combined ancillary fees every single day.
  • Airlines are collecting more revenue from passengers after increasing the fees they charge flyers to check their bags. In September 2018, several major airlines raised the fee for the first checked bag from $25 to $30.
  • Total airline bag and reservation fee collections have increased every year for more than a decade.
  • The record in bag fee collections this quarter follows an astounding $7.6 billion in bag and ticket fees in 2018.
  • Since 2008, airlines have charged flyers more than $73 billion in bag and ticket change fees. Bag fees have now exceeded $1 billion every quarter for more than three years.
  • 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 nearly $325 million in foregone revenue in the first nine months of this year. Since 2008, the $42.8 billion in bag fees that are not taxed have cost the Trust Fund more than $3.2 billion in lost revenue. Those are funds that could have otherwise been spent on needed airport and air traffic control upgrades.

PFC Facts

  • Airlines raked in $7.6 billion from bag and ticket fees last year – more than double the $3.5 billion that airports collected from the PFC in 2018.
  • Airlines charged more bag and ticket fees last year than airports collected via the PFC in 2017 and 2018 combined.
  • Between 2008 and 2018, total airline bag and ticket fees exceeded airport PFC collections by more than $35 billion.
  • The federal cap on the PFC has not been adjusted since 2000 – more than 19 years ago. The last time Congress increased the PFC cap, only half of U.S. adults had access to the internet and approximately 35 percent of Americans owned a cell phone.