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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.

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