With airlines collecting more than $1.5 billion in baggage fees in the second quarter of 2019 – yet another record high – the American Association of Airport Executives (AAAE) called on Congress to update the arbitrary federal cap on local Passenger Facility Charges to spur investment in new terminals, gates, runways and other airport improvements that directly benefit airline passengers.
“Congress needs to address today’s system that puts airline profits in first class but leaves passengers and their needs in the last rows of coach,” said AAAE President and CEO Todd Hauptli upon today’s release of the quarterly bag fee figures.
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 second quarter this year, breaking the previous record high that was set earlier this year. With more than $2.8 billion in bag fees collected through the first six months of the year, airlines are on pace to shatter the record-high $4.9 billion in baggage fees charged last year – a year in which many carriers increased their fees for the first checked bag by $5. Airlines collected another $740 million in reservation change and cancellation fees in the second 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 continue to oppose 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 second quarter of 2019 – an average of nearly $25 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 airlines raised the fee for the first checked bag from $25 to $30 – a 20 percent jump.
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 $71 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 more than $210 million in foregone revenue in the first six months of this year. Since 2008, the $41.3 billion in bag fees that are not taxed have cost the Trust Fund more than $3 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 twice the $3.5 billion than 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.
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 Apple was a year away from releasing the very first iPod.
