Airline Competition: Impact of FAA Legislation on Passenger Facilities Charges and Trust Fund Spending

GAO discussed airline competition and the implications of the proposed Federal Aviation Administration (FAA) reauthorization legislation. GAO noted that: (1) California airports reported that they leased 75 percent of their gates to major airlines; (2) 16 percent of the large and medium-sized airports in California had use-or-lose provisions in their gate agreements; (3) officials at four airports said that airlines had to cease all operations for at least one to three months before the airport could exercise the use-or-lose option; (4) noise was the most frequently cited factor affecting airport expansion; (5) majority-in-interest (MII) clauses in lease agreements give airlines some control over airport expansion; (6) an alternative way for airports to finance capacity expansion would be through charging passengers for airport use; (7) there were a number of potential problems with passenger facility charges (PFC), such as the possible diversion of revenues to nonairport uses; (8) leases on PFC-funded facilities could provide that the tenant airline accommodate a secondary user at some of the leased facilities; (9) MII clauses could detract from the effectiveness of PFC; (10) PFC could help close the gap between federal funding and airport capital needs; (11) air traveler interests need to be safeguarded if PFC are approved; and (12) the proposed legislation would expand the aviation system's capacity by accelerating spending from the Airport and Airway Trust Fund.