Monthly Archives: June 2010

House Appropriations Marks Up DHS Spending Bill

By Channon Hanna
Last week, the House Appropriations Subcommittee on Homeland Security approved the FY 2011 funding bill for the Department of Homeland Security. There is no word yet when the bill may be considered by the full committee.

During the markup, Subcommittee Chairman David Price (D-N.C.) stated that Homeland Security figures show how “the number and pace of attempted attacks against the United States over the past nine months have surpassed the number of attempts during any other one-year period.” He went on to say “that if nothing else, this heightened threat environment provides the clearest justification for the bill’s $43.89 billion in discretionary funding.” Price also stressed that while the bill gave only modest increases or even cuts to most agencies, the Transportation Security Administration budget was increased by 6 percent. Price emphasized that this increase was done in an effort to “respond to the continued and evolving threat to our aviation sector.”

Highlights of the bill include:

  • The TSA receives $8.059 billion, with aviation security programs getting $5.48 billiont.
  • Approved $679.13 million for the purchase and installation of explosive detection systems and explosive trace detection equipment.
  • The bill fully funds 503 advanced imaging technology units, though no specific funding amount was given.
  • It provides for hiring 5,355 new screeners to operate advanced imaging equipment, though no specific funding amount was given.
  • Approved $117.56 million for air cargo security, which is a $5.3 million decrease from the last fiscal year.
  • The bill supports 275 additional canine teams.  No dollar figure was given.
  • Approved $85 million for Secure Flight.
  • Approved $950.02 million for federal air marshals, which is an $89.9 million increase over FY 2010 levels.
  • DHS’ Science and Technology Directorate is funded at $1.071 billion, which is an increase of $65.029.
  • U.S. Customs and Border Protection is allocated $9.844 billion, which is a decrease of $282.29 million over FY 2010 levels.
  • An increase of over $45 million for an additional 389 CBP officers, though no information was provided on how many officers will be dedicated to airports.
  • Approved $351.8 million for US Visit-Exit, which is a $51.8 million increase over FY 2009 funding.

ACI-NA Urges Action on FAA Reauthorization Bill

In a letter today to Senate Commerce Committee Chairman Jay Rockefeller and House Transportation and Infrastructure Committee Chairman Jim Oberstar, Airports Council International-North America (ACI-NA) President Greg Principato stressed the importance of Congress completing their work on H.R. 1586, the Federal Aviation Administration reauthorization bill. “Without action immediately,” Principato wrote, “The House and Senate will be forced to approve the 14th extension of Vision 100 which was signed into law seven years ago.”

The current short-term FAA extension expires on July 3. A House and Senate panel has been working on a compromise for a multi-year extension.

Principato also stressed the importance to the airport industry of including the House language increasing the ceiling for the Passenger Facility Charge (PFC) from $4.50 to $7 in the final bill. “The PFC is a key financing component of the airport industry used for critical safety and security projects, as well as maintaining airline competition in local communities.  Airports cannot afford to delay these important projects aimed at keeping aviation passengers safe and secure,” according to Principato.

The letter also notes that the American Society of Civil Engineers’ 2010 Report Card for American Infrastructure estimated the investment needed for aviation infrastructure improvements over the next five years at $87 billion and projected a $40.7 billion shortfall in airport funding without changes including the PFC increase.

The letter also highlights the important role PFCs play in providing for competition at airports around the country. “The consolidation of the airline industry gives increased market power to airlines that could be used to block efforts by other carriers to enter or increase their presence in a particular market .The PFC is a proven tool airports have used consistently to bring in new carriers to provide increased service and enhance competition in a given area.”

Airports Applauds Confirmation of Pistole as TSA Administrator

Washington, D.C. (June 25, 2010)— Airports Council International-North America (ACI-NA) President Greg Principato issued the following statement in response to the Senate’s confirmation of John Pistole as the Administrator of the Transportation Security Administration (TSA):

“Aviation will benefit from John Pistole’s extensive background in counterterrorism at the Federal Bureau of Investigation as we continue to address critical security issues. The airport industry and ACI-NA look forward to working with him in our ongoing effort to ensure the safety and security of the traveling public.”

The Clock is Ticking

By Jane Calderwood

With 29 legislative days left before Congress adjourns for the August recess, the tick of the clock is getting louder and the list of legislative items remaining to be done is getting longer.

The Senate’s battle over H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, is into week three.  Efforts to invoke cloture in order to get to a vote on final passage continues to elude the Democratic Leadership who need four votes to finish the job.  They have made major changes in the bill, including reducing the price tag from $140 billion to $118 billion and removing the Medicare “Doc Fix” provisions covering reimbursement rates for doctors who care for Medicare patients.  The bill includes provisions to extend unemployment benefits and to extend, by one year, the American Recovery and Reinvestment Act provisions providing relief from the Alternative Minimum Tax for private activity bonds.

The House still needs to take up the Fiscal Year 2010 Supplemental Appropriations bill that includes funding for 30,000 additional troops for Afghanistan and other war-related spending.  The Defense Department has become vocal about needing this additional funding by early July.  The House Appropriations Committee Chairman, David Obey (D-Wis.) continues to struggle to find offsets for domestic spending that would add $30 billion to the cost of the Senate passed version.

The Senate Judiciary Committee begins hearings next week, amid threats of a boycott by the Republican members of the committee, on the nomination of Elena Kagan to be a member of the Supreme Court.  Judiciary Chairman Pat Leahy’s (D-Vt.) plan is for a week of hearings followed by a vote by the committee the week of July 12 and then debate and a vote by the full Senate prior to the August recess.

Energy and climate change legislation have received new leases on life due to the BP oil spill, but the question of what the legislation will entail – discussion has ranged from cap and trade to renewable fuels – is the question of the day.  The second question to be answered is how.  While the House passed a full climate change bill early in 2009, the Senate has been unable to coalesce around any one approach.

Fiscal Year 2011 funding is also up in the air as Congress has failed to adopt a budget resolution.  The Senate Budget Committee did report out a resolution, unlike their counterpart in the House.  House Majority Whip Steny Hoyer (D-Md.), this week, announced the House would take up a one-year budget – normally Congress passes a five year budget – before July 4t.  The House and Senate Appropriations Committees need a budget in order to set the spending allocations for their 12 appropriations bills.  There has been discussion of “deeming” the spending limits in order to allow the committees to write their bills.  When or if there will be floor time for these bills before the beginning of the new fiscal year on Oct. 1 or if we will see a large omnibus appropriations bill post-election remains open for debate.

The FAA reauthorization bill, H.R. 1586, remains the subject of discussion between the House Transportation and Infrastructure and Senate Commerce Committees.  The number of outstanding issues between the two versions of the bill has been winnowed down to a handful.  The issue is whether these issues can be hammered out, and if there will be enough time left for action by both chambers before the current extension, number thirteen, expires on July 3.

ACI-NA Responds to ATA on PFC

James May, President and CEO of the Air Transport Association recently wrote a column arguing against efforts to raise the cap on Passenger Facility Charges (PFCs). Let’s examine the claims made in the article and compare them to the facts.

First, Mr. May claims that the PFC is a “tax” on passengers and is “set” at $4.50 per passenger. The PFC is not a tax. It is a user-fee paid by passengers who utilize the airport and is directly invested in projects at that airport benefiting passengers by enhancing airport capacity, competition, safety, security and improving the environment. The fee is paid only by those who use the airport and it never goes into a government treasury. Also, the fee is not set at $4.50 per passenger. $4.50 is the current maximum that an airport can charge. Some airports charge nothing; many others charge less than $4.50. The cap has been in place since 2000 with no adjustment for inflation. Airports are seeking a reasonable $2.50 increase in the cap.

Next, Mr. May claims that airport charges have gone up 33% since 2000. This hides the fact that since 2000, airport costs have been only about 5% of airline operating expenses. Think of what an important role airports play in the aviation system and consider that airlines only pay 5% of their costs to use them. Not a bad deal. In 2009, airport rents actually went down about 5%. Airports too, have been cutting their budgets, postponing projects and implementing cost savings. Ask any airport manager who has had to layoff valued employees due to airline cutbacks and they will tell you that airports do in fact live in the real world.

Later, Mr. May claims that of a “typical” $300 airfare (I can’t remember the last time I was able to fly anywhere for $300), 21% goes to airports or the federal government in the form of taxes. As an experiment I priced a sample itinerary from Washington, DC to San Francisco, with a connection over the Fourth of July weekend. All three of the airports happen to charge the maximum $4.50 PFC. The base fare for this itinerary was about $500. Expensive, but not outrageous considering I’m flying coast-to-coast on a busy holiday weekend. However, I found that in addition, there is a “peak travel surcharge” of $18.60 one-way. That’s $37.20 roundtrip! Ok, I guess. After all it‘s a busy weekend for travel. Until you learn that this airline considers almost everyday between now and January a peak-travel day with an associated surcharge. Assuming I bring two bags with me, I would have to pay $120 roundtrip. Baggage, peak travel and other airline fees provide the consumer with nothing. They go directly to the airline’s bank account. The PFC directly benefits consumers through safer, more secure and efficient airport facilities with (that perennial fear of the airlines) more competition in air travel.

Finally, federal taxes, made up of a 7.5% excise tax, segment fees and security fees amount to $68 for the roundtrip. PFCs, at the current $4.50 cap are $18. Added up, the picture looks like this:


As you can see the PFC accounts for only 2% of the cost. Together with federal taxes that’s about 11% (well below the 21% claimed by ATA). It’s also well below the percentage going towards airline-imposed baggage fees. Assuming all three airports go to the proposed $7.00, the PFC cost would increase only $10 roundtrip: less than half of the cost of checking one bag one-way. The share of the cost attributable to the PFC would still only be 3%. Not a bad price for safer, more comfortable, environmentally friendly infrastructure. Not to mention more competition in air travel.

So let’s review. Mr. May claims PFCs are a tax. Not true. Next he tries to insinuate that airports are bilking the airlines. Also not true. Finally he claims that airport and government taxes make up 21% of a typical airfare. Again, false (if Mr. May wants to argue that this is just one random sample, studies have shown that the number for actual itineraries is well below 21%). This is yet another example of airline hypocrisy and putting their interests above those of the industry and the traveling public.
-Greg Principato