With airlines collecting nearly $1.3 billion in baggage fees in the third quarter of 2018 – another new record and the 10th consecutive quarter in excess of $1 billion – the American Association of Airport Executives (AAAE) again called on U.S. carriers to drop their short-sighted opposition to adjusting the federal cap on a local airport user fee known as the Passenger Facility Charge (PFC) that finances the construction of new runways, terminals, gates and other airport improvements.
“Ho-Ho-Ho has become Dough-Dough-Dough this holiday season for the airlines with billions in bag fees,” AAAE President and CEO Todd Hauptli said. “Hope they enjoy their last free sleigh-ride before the new Congress reins them in.”
According to data released today by the U.S. Department of Transportation’s Bureau of Transportation Statistics, airlines have collected more than $3.6 billion in baggage fees through the first nine months of the year. That comes on top of a record $4.5 billion in bag fees last year. Airlines have collected another $2 billion in reservation change and cancellation fees through September, for a total of more than $5.6 billion in ancillary fees their passengers have paid so far this year.
At the same time the carriers are increasing their bag fees and collecting record amounts in ancillary charges from their customers, airlines 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. Despite misleading airline arguments, the PFC is not a tax and never goes to the federal Treasury, a fact verified by the non-partisan Congressional Research Service.
Bag and Ticket Fee Facts
Airlines collected nearly $2 billion in baggage and reservation change fees in the third quarter of 2018 – an average of more than $21 million every day in combined ancillary fees.
Bag fees have now exceeded $1 billion for 10 consecutive quarters, a streak that included a record $4.5 billion in bag fees charged in 2017.
Since 2008, airlines have collected more than $65 billion in bag and ticket change fees.
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 has lost $273 million in foregone revenue so far this year. Since 2008, the $37.2 billion in bag fees that are not taxed have cost the Trust Fund almost $2.8 billion in lost revenue. Those are funds that could have otherwise been spent on needed airport and air traffic control upgrades.
While airlines raked in nearly $7.5 billion from bag and ticket fees last year, airports collectively received less than $3.3 billion from the PFC in 2017.
Airlines charged more bag and ticket fees last year than airports collected via the PFC in 2016 and 2017 combined.
The federal cap on local PFCs has not been adjusted since 2000 – more than 18 years ago. The last time the federal PFC cap was increased, Google was in its second year running a new search engine and Apple was more than a year away from releasing the first iPod.