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September 15, 1999, Wednesday 3 STAR EDITION
Correction Appended

SECTION: BUSINESS; Pg. 1

LENGTH: 1558 words

HEADLINE: A tax to clear the tarmac;
Ticket fees may ease congestion

SOURCE: Staff

BYLINE: DAVID IVANOVICH, Houston Chronicle Washington Bureau

DATELINE: WASHINGTON

BODY:
WASHINGTON - The nation's airlines are engaged in a dogfight with local airport authorities over a plan to raise airplane ticket taxes as a way to help relieve America's congested aviation system.

The air carriers are hoping to shoot down a provision in a House bill that would allow local airports to charge passengers as much as $ 12 per round trip in new taxes to build new facilities, beef up security and reduce airport noise.

Proponents of the tax increase, pointing to record flight delays this summer, argue that raising these "passenger facility charges" would be the best way to expand airport capacity and promote greater competition.

"Our aviation system is hurtling toward gridlock and potential catastrophes in the sky if we do not act promptly," House Transportation Committee Chairman Bud Shuster, R-Pa., and his committee's ranking Democrat, James Oberstar of Minnesota, warned in a letter last week.

The passenger fee debate, however, is caught in a web of other issues, from budget fights to next year's presidential race. Sen. John McCain, R-Ariz., chairman of the Senate Commerce committee and a presidential hopeful loath to go out on the campaign trail being accused of raising taxes, has joined the airlines in opposing the higher fees.

However, the passenger facility charges are a key element of an aviation bill authored by Shuster. And this crafty 27-year veteran of the House has a reputation for getting bills through even the toughest legislative logjams.

"Mr. Shuster is a masterful legislator," noted Tom Chapman, legislative counsel for Southwest Airlines. "He's very skilled at kicking the can down the road."

Shuster declined to be interviewed for this story.

Most would agree 1999 has been a frustrating year for the air traveler. There has been a 20 percent increase from a year ago in flight delays of more than 15 minutes, according to the Federal Aviation Administration. Only about a third of that increase can be attributed to weather problems.

At the heart of the debate is the question: Will raising taxes fix that problem?

Air travelers already pay a variety of federal and local taxes, including a federal excise tax, segment fees, international departure and return fees, and fuel taxes.

Airports also can charge up to $ 3 per traveler in passenger facility charges. Each airport an aircraft stops at during a flight can take a bite, although the charges are capped at $ 12 per passenger per round trip.

The nation's air travelers pay about $ 1.2 billion to $ 1.4 billion annually in passenger facility charges.

Most of the nation's airports assess the passenger facility charges, though Houston's three airports - Bush Intercontinental, Hobby and Ellington Field - represent major exceptions.

Houston's Department of Aviation relies on airport concessions, landing fees, fuel charges, parking fees and other charges to meet its financial needs. "We don't charge just to charge," department spokesman Richard Fernandez said.

Shuster's bill would permit local airports to double their passenger facility charges for a total of $ 24 per passenger round trip.

The nation's airports say they currently need about $ 10 billion annually to meet their capital improvement needs but are only about to obtain about $ 6 billion to $ 7 billion each year, the bulk of which comes from landing fees paid by the airlines.

"That gap has existed for a number of years, and the compound effect is significant," said Jeffrey Goodell, vice president of government affairs for the Airports Council International North America.

By raising the passenger facility charges, the airports contend, they can build new gates and attract new competitors, and that should help break the fortress hubs that individual carriers have built in numerous cities.

The airlines, however, argued that before lawmakers start raising their passengers' taxes, they first ought to allocate the $ 8 billion in the Airport and Airways Trust Fund, the pot of aviation tax dollars set aside to help airport construction projects.

However, lawmakers have been reluctant to deplete the trust fund because they have been using the surplus in the fund to help balance the budget. Using that money solely for aviation would, in effect, take money away from other federal programs.

The air carriers have been joined by the tax-fighting hawks on Capitol Hill. "The passenger facility charge is a tax, no matter what advocates want to call it," said Pete Sepp, a spokesman for the Alexandria, Va.-based National Taxpayers Union. "The burden on air travelers . . . is ridiculous."

The higher fees are particularly painful for low-cost carriers such as Dallas-based Southwest Airlines, which rely heavily on penny-pinching passengers.

The average Southwest round trip fare runs about $ 150, Chapman said. The current taxes and new fees being proposed would bring the total price to nearly $ 200.

"We're talking about a very price sensitive market," Chapman said. "That's why they came to use us in the first place."

The extra fees might not mean much to the traveler willing to pay, say, $ 1,000 for a last-minute walk-up fare. "If you're talking about $ 150 air fare and a family of four, you're talking about $ 200 in taxes, so it really has an impact on us," Chapman said.

Southwest, because of its routing strategy, tends to make more stops than other carriers. That means its passengers would pay more because that short-hop route system enables more airports to assess passenger facility fees.

However, Shuster's bill would do more than raise the passenger facility fees. It also would significantly boost federal spending on airports through the Airport Improvement Program.

It also would wall off the Airport Trust Fund and bar lawmakers from dipping into the fund to help pay for other programs.

Because of the importance of those other provisions, the airlines held their fire during the House debate and backed Shuster's $ 57 billion aviation bill.

"We support Congressman Shuster in his efforts to make sure that the money airline passengers pay gets spent to improve the air traffic control system," said David Messing, spokesman for Houston-based Continental Airlines.

The House passed Shuster's bill earlier this year. The Senate had no comparable bill, but Shuster managed to finesse the parliamentary niceties to allow the issue to be taken to a conference committee, if the Senate were only to agree.

However, selling the Senate on the Shuster bill may be tough because the leaders there have their own agendas. And, they aren't showing much willingness to deal.

Senate appropriators don't like Shuster's plan to wall off airport spending from other budgetary concerns, although he managed to pull off a similar maneuver on the Highway Trust Fund last year.

McCain, meanwhile, wants to relax restrictions on landing slots and lengths of flights permitted out of Washington's Reagan National Airport. However, Sen. Charles Robb, D-Va., has let it be known he'd block any effort to go to a conference committee with those provisions.

On Friday, Senate Majority Leader Trent Lott, R-Miss., tried to appoint Senate conferees to discuss the aviation bill, but the Democrats blocked the move. On Tuesday, Lott tried to schedule a vote on McCain's aviation bill, but Democrats refused to accept a time limit on the debate. This defeat left them open to a filibuster.

That would have been enough to effectively kill most other bills. However, this is Shuster's baby.

"No one will underestimate Bud Shuster in this effort," Southwest's Chapman said. "No one counts him out."

<PRE> Causes of delay

Number of delayed flights from Jan. 1-Aug. 30, 1999 and percentage change from same period in 1998.

Weather. . . . . . . . . . 188,639. . . . +8.6 %.

Air traffic volume. . 23,637. . . -16.7 %.

Runway. . . . . . . . . . 10,382. . . . . +94.0 %.

Equipment. . . . . . . . 5,747. . . . . . +110.0 %.

Other. . . . . . . . . . . . . .35,377. . . . . . +236.1 %.

Total. . . . . . . . . . . . . 263,782. . . . . . +19.5 %.

Busiest airports in North America

. . . . . . . . . . . . . . . . . . Ann. passengers. . . One-year %.

Rank Airport code. . . . . (millions). . . . . . . change.

1. Atlanta (ATL). . . . . . . . . 73.5. . . . . . . . . . . . . +7.7 %.

2. Chicago-O'hare (ORD). . 72.5. . . . . . . . . . . . +3.0.

3. Los Angeles (LAX). . . . . 61.2. . . . . . . . . . . . +1.8.

4. Dallas-Ft. Worth (DFW) 60.5. . . . . . . . . . . . . . . . 0.

5. San Francisco (SFO). . . . 40.1. . . . . . . . . . . . . -1.1.

6. Denver (DEN). . . . . . . . . . 36.8. . . . . . . . . . . . . . +5.3.

7. Miami (MIA). . . . . . . . . . . 33.9. . . . . . . . . . . . . . -1.7.

8. Newark (EWR). . . . . . . . . 32.5. . . . . . . . . . . . . . +5.2.

9. Phoenix (PHX). . . . . . . . . 31.8. . . . . . . . . . . . . . +3.6.

10. Detroit (DTW). . . . . . . . 31.5. . . . . . . . . . . . . . . . .0.

11. New York-JFK (JFK). . . 31.4. . . . . . . . . . . . . -2.8.

12. Houston-Bush (IAH). . 31.0. . . . . . . . . . . . . +8.1.

13. Minneapolis-St. Paul (MSP. . 30.3. . . . . . . . +0.5.

14. Las Vegas (LAS). . . . . . . . . . . . . 30.2. . . . . . . . -0.3.

15. St. Louis (STL). (SEE CORRECTION). . . . 38.7. . . . . . . . . +3.7.

42. Houston-Hobby (HOU). . . . . . .8.8. . . . . . . . .+5.7.

</PRE>

CORRECTION-DATE: September 16, 1999

CORRECTION:
CORRECTION: The number of airline passengers who passed through St. Louis Airport in 1998 was 28.7 million. The chart ranking North America's busiest airports gave an incorrect number.

GRAPHIC: Graphs: 1. Flight delays (color, bar graph); 2. Causes of delay (color, text); 3. Busiest airports in North America (color, text); Photo: 4. Airplane (color); Mug: 5. Bud Shuster (color); 1-4 Robert Dibrell/ Chronicle, Sources: Federal Aviation Administration, Airports Council International North America

LOAD-DATE: September 17, 1999