Plea Made To Deregulate Airports

Just as the airlines were deregulated in 1978, the nation's airport operators are seeking limited federal deregulation.

In a House hearing earlier this month, the airports' two major trade groups - the American Association of Airport Executives (AAAE) and the Airports Council International-North America (ACI-NA) - made the case for fewer rules controlling the use of airport fees and charges to finance operations and expansions. David Plavin, the ACI-NA president, will make the industry's case before the Presidents' Council of the Regional Airline Association (RAA) during the group's annual meeting in St. Louis this week.

While the RAA has not taken a position on the airports' pending request, it does have some concerns that the board will discuss. The Air Transport Association (ATA) testified against many of the changes that the airports are seeking. The Air Carriers Association of America (ACAA) spoke in support of a number of the airports' goals.

The airports want:

• A common airport currency - some dubbed the "airport euro" - which would allow greater flexibility in the use of airport improvement funds (AIP) and passenger facility charges (PFCs).
• Permit the use of AIP funds to construct gates, ticket counters and other facilities. The PFCs now can be used to under write these improvements.
• Allow AIP dollars to be spent on noise mitigation.
• Reduce the review process and comment period for PFC-funded projects.
• Eliminate the distinction between caps on PFC that vary by airport size.
• Allow airports to use airport revenue to attract commercial air service.
• Change the federal tax law so that airport bonds are not subject to the alternative minimum tax, thus reducing the interest rates and permitting the refinancing of the bonds.
• Eliminate the competition plans. In his testimony before the House Aviation Subcommittee, Charles Barclay, president of AAAE, noted that competition plans have held up for months airport expansion projects designed to house new airlines. Much of the data that the airports must include in the report to the Department of Transportation (DOT) comes from the DOT's own data banks. "This requirement - to extract and decode data from DOT only to report it back to the agency - is just one example of the total disregard for the burden these regulatory requirements impose," he said. It took some airports three months to compile the information and then it took DOT another nine months to review the reports.

"We are concerned about any diversion of AIP or PFC funds away from capacity-enhancing projects, especially considering that demand is rapidly outpacing capacity at many airports system-wide," said Faye Malarkey, RAA's vice president for legislative affairs. "Demand management scenarios often proposed in concert with limited capacity frequently have deleterious projected impacts on regional airlines and the smaller communities we serve. We feel it is very important for AIP and PFC funds to be used to enhance capacity."

In his remarks, ATA President James May asked that the flexibility the airports are seeking should not translate into "less accountability." By reducing any conditions imposed on the use of either AIP or PFC money, May said the carriers could be harmed. It is the airlines who collect and pay these fees, he noted. Congress should take a fresh look at the AIP apportionment and create more discretionary grants.

The competition plans do indeed foster competition, said Jeffery Shane, DOT under secretary for policy. He asked that Congress not waive the reporting requirements.

Airports need to continue to file competition reports, said Edward Faberman, ACAA's executive director. However, the trade group representing low-fare carriers noted it could support some streamlining in the reporting requirements. The group also supports airports in their request for greater flexibility in the use of AIP and PFC dollars.

>>Contacts: Charles Barclay, AAAE, (703) 824-0500; Faye Malarkey, RAA,(202) 236-0948, James May, ATA, (202) 626-4000; Jeffrey Shane, DOT, (202) 366-4000; Edward Faberman, ACAA, (202) 639-7505.<<