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A dramatic increase in airline travel will catch passengers coming and going. They'll face more-frequent delays and get hit with higher costs to help finance new airport construction.
Passenger traffic already has returned to the record level of 700 million a year set before the Sept. 11 terrorist attacks in 2001. With the higher volume has come an increase in delays of all kinds. In the first quarter of 2005, arrival delays were up 17% over the same period last year and affected more than 25% of all flights, according to Ken Mead, the Inspector General at the Department of Transportation. "We expect the traffic and delay growth to continue," Mead said in testimony before the Senate Commerce Committee.
The Federal Aviation Administration reports that traffic growth is on track to exceed 1 billion passengers a year by 2015. To meet that demand, the Airports Council International-North America estimates that capital development costs will need to average about $14.3 billion a year over five years, for a total of $71.5 billion. It's unlikely, though, that more than $11 billion a year will actually be spent on new construction.
Typically, about 60% of airport improvements are funded through bonds. Twenty percent comes from the federal government and another 20% comes from fees paid by travelers in so-called Passenger Facility Charges.
Lawmakers, who are frequent travelers themselves, tend to be supportive of airport capital projects. But budget pressures will limit any big increases in federal funding. That means more money will need to be raised through bonds and passenger fees.
The fees, which are collected by the airlines and turned over to the airports, are currently set at $4.50 per flight segment, up to a maximum of $18.
The airport association wants to raise the fees to about $6 per segment, an increase that Congress is likely to approve, despite opposition from the airlines. The carriers dislike the fees because passengers view them as just another hike in ticket prices.
If passenger fees and government funding can't pay for a needed expansion, airports will make up the shortfall by turning to revenue bonds. These bonds are repaid with fees the airlines pay for landing rights and terminal rents. If an airline's fees are raised to pay for the additional work, this hike will eventually get passed along to passengers. "The passenger will end up paying, one way or another," says one airport executive.
One of the most effective ways to increase airport capacity is to add runways. Eight new runway projects are expected to be completed between now and 2008. They include projects at airports in Minneapolis, to be completed in October 2005; Cincinnati in December 2005; St. Louis in April 2006; Atlanta in May 2006; Boston in November 2006; Philadelphia in December 2007; Charlotte, N.C., in February 2008; and Seattle in November 2008.
There are about 10 other runway projects in the planning stage, including those at Chicago O'Hare, Los Angeles and Washington-Dulles.
Researcher-Reporter: Gerry Moore
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