PHOENIX – Airline representatives during a panel discussion said they are committed to helping airports fund capital improvement projects when they are necessary but reiterated the industry’s longtime opposition to an increase in the passenger facility charge cap.
“It’s no secret that the airlines are concerned about a raise in the PFC,” says Nathan Lopp, managing director of corporate real estate for United Airlines. “Our position on that is airport projects do get funded, whether through airport-backed bonds, the PFC or other sources.”
After further questioning from audience members over whether the PFC was a tax or a fee, commercial airline officials said it doesn’t matter.
“You can call it Bob if you want to, it’s still a tax,” said DJ Anderson, director of properties and corporate real estate for American Airlines.
The discussion took place Tuesday morning during a roundtable discussion at Airports Council International-North America’s inaugural Business of Airports conference in Phoenix.
Lopp and others indicated they support the improvement of airport facilities, particularly those that are touchpoints for their customers, such as baggage-claim areas and concessions programs. But they add that some projects aren’t necessary or advisable.
“Don’t overbuild. Please don’t overbuild,” Lopp urged, noting that far-reaching plans that plan for optimistic growth can result in a “downward spiral” when predictions don’t come true.
It helps low-cost carriers, said Antony Tam, corporate real estate consultant for Spirit Airlines, if projects are phased, so that airports don’t end up overbuilding new facilities they end up not needing.
Anderson agreed, citing Phoenix Sky Harbor International (PHX) as an airport that has done a good job of ensuring its Terminal 3 modernization program is planned with stopping points and time to assess market conditions. He added that though airlines support having airports improve their facilities, they also are still recovering from several lean years during which the industry suffered a collective $32 billion in losses, so they still have projects of their own to complete.
“It takes many good years to overcome that,” he said.
Airline officials also spoke on the struggles small and medium markets have had in recent years attracting new and keeping existing service. In general, they say, market conditions – the pilot shortage and fuel costs, for example – drove the challenges those cities are facing, not airline consolidation.
In order to attract new service, it’s helpful for those markets to keep costs low.
“At the end of the day, it’s costs and efficiency,” Tam said. “We don’t want to see high landing fees, we don’t want to see variable fees.”
Added Anderson, airports with strong cash reserves – especially those in origination and destination airports – could use some of those funds to start lowering costs for airlines.
