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January 12, 1999, Tuesday ,City Edition

SECTION: NATIONAL/FOREIGN; Pg. A5PHOTO

LENGTH: 566 words

HEADLINE: Administration may seek airport tax increase

BYLINE: Associated Press

BODY:

WASHINGTON - The Clinton administration, which was unsuccessful last year in an attempt to raise an airport ticket tax from $3 to $4, may try to increase the charge to $5 as part of a bill to renew the Federal Aviation Administration, according to a source at the Transportation Department.

The passenger facility charge is a tax requested by local governments and earmarked for improvements at their airport. It must be approved by the Transportation Department. The charges are now capped at $12 a ticket. They would rise to a maximum of $20 a ticket under the administration proposal.

The federal government also levies its own airline ticket tax: 8 percent of a passenger's air fare, and $2 for each leg of a trip. The combination of taxes and passenger facility charges can add substantially to the price of an airplane ticket.

For example, the cost of a round trip from Washington to Orange County, Calif., via O'Hare airport in Chicago, climbs from $190 to $225 when the tax, segment charges, and passenger facility fees are added. The airports in Washington and Chicago both charge $3 facility fees each way.

The administration has yet to announce its intentions, but the fee increase is one of the final elements being drafted into legislation that would reauthorize the FAA, according to the Transportation Department source who spoke on the condition of anonymity.

In an interview in December, Transportation Secretary Rodney Slater said the aviation system needs investment, including money to modernize the air traffic control system, improve personnel training, and rebuild airports.

Last year's administration proposal to raise the facility charge was supported by the Airports Council International-North America, which represents airport operators. It said airports will not be able to handle an expected surge in travel without significant capital investment.

The airlines carried an estimated 615 million passengers in 1998. Within a decade, that figure is expected to exceed 1 billion a year.

In the past, airlines have opposed an increase in passenger facility charges, since they add to the bottom line of a ticket but do not go to the airlines themselves.

"More than enough money is collected through the various means such as the airport program, existing" passenger facility charges, "the fees paid by airlines, and concession revenues," said Edward Merlis, head of legislative affairs at the Air Transport Association, a trade group.

The political prospects for a passenger facility fee increase are uncertain.

Last week, Representative Bud Shuster, chairman of the House Transportation Committee, said he will try to pass legislation requiring that all federal ticket tax money be spent on airport improvements.

The money is deposited in the Airport and Airway Trust Fund, but Shuster said that of the $10 billion expected to be collected this year, only $5.6 billion will be spent. The rest, as in past years, will be left on the federal government ledger sheet to contribute to a balanced budget.

Shuster, a Pennsylvania Republican, said that if he is successful in getting all tax money spent on airport improvements, he would also support an increase in the passenger facility charge.

The administration's 1998 facility charge proposal died in the Senate Commerce Committee.

GRAPHIC: REP. BUD SHUSTER
Seeks airport improvements

LOAD-DATE: January 12, 1999