Airport, Airlines Share Differing View

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By Liying Gu

Airport and airline representatives shared their different views on a number of issues during the Airport Airline Roundtable at the 2011 ACI-NA Economics and Human Capital Conference.

They first discussed the challenges for the industry as a whole as it relates to funding infrastructure improvements, unfunded mandates, potential AIP cut and no increase in PFCs. The airports on the panel are asking the airlines what they would prefer, i.e. include the cost in the airline rates and charges, or include in the PFC? These are necessary projects to address safety, security or environmental issues. Even though the airlines acknowledge the necessity of these projects, they would not change their position on a PFC increase. They believe the projects can be accomplished with the existing funding mechanism. One thing that the airports and airlines do agree on is to protect the tax exempt status of airport bonds.

They then discussed top agenda items when negotiating new airport use and lease agreements. Airlines generally like to set up an agreement. They believe that an agreement will help establish a transparent structure and set up goals for performance metrics. They believe a shorter lease term creates many opportunities to discuss CIP program, best practices and funding sources. Airport representatives emphasized that airlines should look at multiple metrics and not just look at cost. There are some costs that are out of control by airports such as pension.

When asked for their view on airline incentive programs from airports, Laura McKee of the Air Transport Association stated that they generally do not support any subsidy from airports especially if the subsidy comes directly from the airline rate base. However, airports are facing the challenge of staying competitive. The pressure comes from their community and economic development agencies.

When asked for their view on airline consortium, the airlines overall think it is working and the difficulty lies in how to get it started. For some airports, there are state legislations that prevent airports from outsourcing.