FAA bill would privatize air traffic, kill fare-ad rule, raise airport fees

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A proposal to transfer control of the U.S. air traffic control system from the FAA to a government-created, nonprofit corporation has dominated discussion about the Aviation Innovation, Reform and Reauthorization (AIRR) Act, the FAA reauthorization bill passed by the House Transportation and Infrastructure Committee on Feb. 11.

But airline and travel industry stakeholders are also closely following other portions of the bill, including a proposal to do away with the full-fare advertising rule, which the DOT implemented in 2012, as well as measures that relate to funding of airport infrastructure projects.

The bill, which has yet to be scheduled for a vote by the full House, would fund the FAA through 2022. But though existing FAA funding expires on March 31, the AIRR Act remains several steps away from passage. Notably, the Senate Commerce Committee has yet to unveil a companion bill. Congress could pass a temporary funding bill, if needed, prior to the March 31 deadline.

At the Feb. 11 hearing, the House transportation committee approved a proposal put forward by Rep. Carlos Curbelo (R-Fla.) to do away with the full-fare advertising rule, which requires airlines, travel agents, packagers and anyone else selling commercial plane tickets to post the total price in print and online advertising, including taxes and fees.

Under the Curbelo amendment, ticket sellers could post base fares in their advertising, provided that the total cost, including taxes and fees, was separately disclosed.

A similar measure was passed by the House in 2014 but never gathered momentum in the Senate. This year, it has sharply divided the travel industry. Supporting the measure is the commercial airlines’ trade group Airlines for America (A4A), which argues that airline tickets should be sold just like other consumer products, with the base price advertised and taxes revealed at the point of sale.

Sean Kennedy, A4A’s senior vice president of global government affairs, said the existing regulation keeps consumers in the dark about how much taxation they are subject to during air travel. The rule can also lead consumers to think that airfare is more expensive, he said, since many shoppers will assume that they’ll have to add taxes to the advertised price as they would for other products.

But ASTA, the Business Travel Coalition and the OTA trade organization Travel Tech have come out strongly against the effort to end the full-fare rule, arguing that the measure would make prices less transparent, frustrating consumers’ ability to comparison shop.

“The traveling public deserves to have access to the transparent, all-in cost of airfare, including all taxes and fees, so they can make true comparisons and educated decisions regarding their travel choices. This provision would harm consumers by reducing, rather than promoting, all-in price transparency,” Travel Tech spokesman Phil Minardi said.

Whatever the outcome is in Congress, aviation analyst Kyle Bailey said industry representatives and travelers would adapt.

“It will be business as usual,” Bailey said. “Whether it goes through or doesn’t go through, people will get used to it.”

Proposed measures in the AIRR Act to fund airport infrastructure are also exposing divisions within the U.S. travel industry.

Opposing sides of the airport infrastructure debate said in interviews last week that they could live with those figures.

But stronger battle lines have been drawn over whether Congress should raise the maximum amount that airports can assess in Passenger Facility Charges (PFC) per flight segment.

As opposed to Airport Improvement Program appropriations, which are distributed by Congress, airports receive PFC funds directly, which they can use for approved projects.

Under existing law, the maximum PFC is $4.50 per flight segment.

According to FAA estimates, airports collected $2.96 billon in PFC funds in 2015. That helped finance what the FAA estimated to be $33.5 billion in infrastructure needs between 2015 and 2019.

But while the AIRR Act would leave the cap at $4.50, airport advocates, saying that the limit hasn’t been increased since 2000, proposed that it should be raised to $8.50.

Among those calling for the higher cap are the American Association of Airport Executives and the U.S. Travel Association.

“If we really are going to solve problems in some of our largest airports, things like congestion and lack of airport competition, our airports are really going to need to accelerate investments,” said Erik Hansen, the senior director of domestic policy at U.S. Travel. He added that 12 to 15 U.S. airports are expected to reach their capacity in the next 10 years.

“If you’ve got Donald Trump and Joe Biden saying the same things, that our airports are behind global standards, that constitutes consensus,” he said.

But A4A opposes an increase to the PFC limit. “We do not want to do anything that is going to make travel more expensive for consumers,” Kennedy said.

Airports, A4A asserted, have plenty of other ways to get construction funding, including bonds and other forms of borrowing.

Among the other proposals currently included in the AIRR Act are:

• A ban on cellphone calls during flights.

• A ban on smoking e-cigarettes during flights. 

• A requirement that airlines refund fees on checked baggage that is lost for more than 24 hours.

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