NPRM on Passenger Facility Charge Program, Debt Service, Air Carrier Bankruptcy and Miscellaneous Charges

FAA-2006-23730

Filed in Federal Register January 26, 2006

Notice | As Published in the Federal Register for February 1st

This action proposes to change the passenger facility charge program to add more eligible uses for revenue, protect such revenue in bankruptcy proceedings, and eliminate charges to passengers on military charters. These proposed actions respond to the Vision l00-Century of Aviation Reauthorization Act. In addition, the proposed action would revise current reporting requirements to reflect technological improvements; incorporate some existing practices and policies into current regulations; and clarify and update existing references and regulations. This proposal would further streamline the existing policies of the passenger facility charge program.

By: Dennis Roberts

April 3, 2006

Re: Comments of The Air Transport Association of America and The Regional Airline Association

We appreciate the need to ensure that air carriers are being properly compensated for the considerable expense of collecting, handling, and remitting PFC funds, and we support the notion of a periodic review of the compensation levels. We are concerned, however, that the FAA's proposal to re-set the handling fee based on air carriers' voluntary responses to the FAA's request for "audited air carrier collection, handling, and remittance costs" in the stated categories may result in a handling fee that fails to cover the carriers' actual costs. Air carriers may elect not to incur the additional expense necessary to compile the data, which could result in the FAA having grossly incomplete industry information as a basis for re-setting the handling fee.

ATA and RAA recommend, therefore, that the FAA clarify what it means by "audited" air carrier costs. Would the FAA require an opinion from the carriers' auditors as to the accuracy of the costs? Would the carriers' auditors be able to provide this opinion if the carriers' accounting systems do not capture this information specifically for PFC collection, handling, and remittance?

If the FAA retains the proposed provision in the Final Rule, ATA and RAA request that the regulations provide that the handling fee, set pursuant to this elective reporting process, may not be reduced below the current eleven cents per PFC level. Alternatively, submission of the cost information should be mandatory, in which case the FAA should establish a five-year cycle for review of the handling fee, establish (in conjunction with an airline/airport task force) a set of airline data points that will be used in establishing the fee. and publicize this endeavor so that airlines can track the data prospectively rather than having to look back every five years. In short, ATA and RAA support the periodic review, but desire the review to have a minimal data collection burden on the air carriers.

By: ATA, Thomas Browne, 202-626-4100, tbrowne@airlines.org / RAA, Deborah McElroy, 202-367-1170, mcelroy@raa.org

April 3, 2006

Comments of Airports Council International - North America

ACI-NA believes that we need to go beyond the process of inventing and refining countless controls on the program. Rather, FAA should take a new look at “graduating” the program to one that (1) reflects the overwhelmingly responsible financial management exhibited by airports, as evidenced by independent bond ratings, and (2) truly recognizes that PFCs are local, not federal funds. We look forward to working with the FAA to develop further enhancements to the program to streamline the PFC process for both FAA and airports, and to ensure that PFC funds are efficiently delivered to airports and applied to projects that will enhance airports’ ability to meet current and future aviation needs.

By: ACI-NA

April 3, 2006

Comments of The Port Authority of New York and New Jersey

Airport operators should be given the flexibility to use PFCs for any airport project that is connected to the movement of people and cargo for the purposes of commerce, trade, travel, and tourism. In the event that an airport operator determines that using PFCS to pay debt service on ineligible projects is good fiscal management and thus enables it to effectively maintain and operate its airport then that operator should be given the flexibility to do so.

An airport operator should be given the flexibility to use PFCs for any airport project that is related to the movement of people and cargo for the purposes of commerce, trade, travel, and tourism, where the airport operator deems that the project will aid the air traffic program and is necessary to maintain and operate its airports. We support giving airport operators the discretion to use airport funds provided there are currently eligible uses for other airport funds.

The Port Authority endorses any effort to streamline the PFC process that: makes the program more flexible; enables the administration of the program to be more efficient; gives more autonomy to the airport operator; and/or shortens the length of the preparation and review process.

By: Port Authority

April 6, 2006

Comments of The City of St. Louis, Missouri

The City believes that Section 511 is consistent with the Congressional intent to protect the trust fund status of PFC revenues. In this context, airport operators such as the City are not 'Third parties" from whom PPC revenues must be protected, but are the primary parties on whose behalf those funds are collected. The City requests that FAA clarify that proposed S158.49(c)(3) does not apply to airport sponsors, who are not 'third parties," but to parties extraneous to the PFC scheme such as banks and other airline creditors.

Counsel: Spiegel & McDiarmid, Rise Peters

On File at Federal Register May 22, 2007

Final Rule | As Published in Federal Register May 23, 2007

This final rule amends FAA regulations dealing with the Passenger Facility Charge program to add more eligible uses for revenue, protect such revenue in bankruptcy proceedings, and eliminate charges to passengers on military charters. These changes respond to the Vision 100-Century of Aviation Reauthorization Act. This final rule also revises current reporting requirements to reflect technological improvements, and to clarify and update existing references and regulations. This final rule further streamlines the existing policies of the PFC program.

By: Marion Blakey

On File at Federal Register June 7, 2007

Final Rule Correction

When the FAA issued a final rule which amended FAA regulations dealing with the Passenger Facility Charge program to add more eligible uses for revenue, protect such revenue in bankruptcy proceedings, and eliminate charges to passengers on military charters, we erroneously stated a paragraph reference in the regulatory text. This correction removes the erroneous paragraph reference and replaces it with the correct paragraph reference.

This correction is effective June 22, 2007.

By: Office of Rulemaking, Pamela Hamilton-Powell