[Federal Register Volume 65, Number 69 (Monday, April 10, 2000)]
[Proposed Rules]
[Pages 18932-18933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8365]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 65, No. 69 / Monday, April 10, 2000 / 
Proposed Rules  

[[Page 18932]]



DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 158

[Docket No. 27791; Notice No. 96-3]
RIN 2120-AF69


Passenger Facility Charges

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Advance notice of proposed rulemaking (ANPRM); withdrawal.

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SUMMARY: The FAA is withdrawing the ANPRM, published on April 16, 1996, 
that proposed to amend provisions of the regulations on passenger 
facility charges (PFCs). These provisions address the collection, 
handling, and remittance of PFCs.

FOR FURTHER INFORMATION CONTACT: Joe Hebert, Passenger Facility Charge 
Branch (APP-530), Room 619, Airports Financial Assistance Division, 
Office of Airports Planning and Programming, Federal Aviation 
Administration, 800 Independence Avenue, SW, Washington, DC 20591; 
telephone (202) 267-8902.

SUPPLEMENTARY INFORMATION:

Background

    On May 27, 1994, the Airport Transportation Association of America 
(ATA) petitioned for a rule change to 14 CFR 158.53(a) to extend the 
handling fee of $0.12 per each PFC remitted to a public agency, for an 
additional 3 years. Under the terms of Sec. 158.53, the handling fee 
dropped to $0.08 per PFC remitted on June 28, 1994. The ATA also 
proposed that after the third year, they would file comments to 
determine if the entire airline industry had fully recovered the cost 
necessary to maintain the PFC collection system. Further, the ATA 
requested that Sec. 158.53(a) be amended to allow air carriers to 
retain a handling fee for each refunded PFC. On June 24, 1994, the FAA 
published a summary of the ATA's petition in the Federal Register (59 
FR 32668). Air carriers and public agencies were asked to provide 
specific data to the FAA, so that the agency could determine an 
adequate rate of airline compensation. The FAA received 12 comments in 
response to this notice, but determined that these comments did not 
constitute sufficient information to make a decision.
    As a result, the FAA issued an ANPRM (61 FR 16678) on April 16, 
1996, providing additional guidance on the quantity and quality of 
information that the FAA needed in order to make a decision regarding 
the ATA's petition on adequate compensation for PFC revenue collecting, 
handling, and remitting. The FAA also used the ANPRM to solicit 
comments on a number of ancillary issues pertaining to the handling and 
transfer of PFC revenues and on other changes in Part 158 to 
accommodate new legislation and industry practices. Specifically, these 
issues included the following proposals to amend sections of Part 158: 
require separate handling of PFC collections by air carriers to 
facilitate PFC remittance in the event of air carrier bankruptcy; 
implement the statutory prohibition on collection of PFCs from 
passengers traveling on frequent flyer awards; establish that PFC 
remittance occurs at the time that a public agency receives PFC 
collections from an air carrier; and codify current industry practice 
by providing for appropriate PFC adjustments when a trip itinerary 
change is initiated by the passenger.
    To further analyze whether a change in PFC compensation is 
necessary, the FAA requested detailed and persuasive data from air 
carriers that, in total, represented at least 75 percent of 
enplanements at PFC locations. The FAA determined that information on 
75 percent of total PFC enplanements was necessary to give an adequate 
view of current industry cost and would provide adequate cost data to 
determine if a change in collecting, handling, and remitting 
compensation is necessary. In particular, the PFC statute requires that 
the handling fee be a ``uniform amount'' that ``reflects the average 
necessary and reasonable handling expenses (net of interest accruing to 
the carrier and agent after collection and before remittance).'' A 
sample of less than 75 percent, if it included a disproportionate 
representation from carriers with higher PFC handling costs, would not 
yield an accurate average handling cost calculation for the industry. 
(61 FR 16678).

Reasons for Withdrawal

    The FAA received responses with data from 10 air carriers. The FAA 
also received responses from 18 public agencies and 5 industry 
organizations. The airline responses represented 62 percent of the 
enplanements at PFC locations, which was 13 percent below the minimum 
response required by the FAA. As a result of the lack of information 
provided, the FAA cannot conclude that the current compensation level 
of $0.08 for each PFC remitted to a public agency does not provide 
adequate compensation to air carriers. The FAA has no justification to 
change the PFC collecting, handling, and remitting compensation level 
either by adjusting the uniform average handling fee itself or changing 
the basis on which the fee is paid from PFC remitted (which does not 
include refunded PFCs) to PFC collected (which would include refunded 
PFCs). Thus, the compensation level remains at $0.08 for each PFC 
remitted to a public agency, and this compensation cannot be claimed by 
the air carrier for refunded air travel tickets.
    In addition, Congress recently passed H.R. 1000. When signed into 
law, this legislation, among other items, will establish higher PFC 
charge levels of $4 and $4.50, will set additional criteria for the 
review and approval of charges at the higher levels, and will make 
other miscellaneous changes to the prior PFC legislation. In the 
``Statement of Managers for the Conference Report accompanying H.R. 
1000,'' the FAA was charged with reviewing the compensation level for 
air carriers collecting, handling, and remitting PFCs to airports. The 
FAA will shortly commence a new rulemaking to examine air carrier 
compensation in response to this requirement.
    Many commenters addressed the three proposals the FAA made 
regarding bankruptcy. The first proposal would prohibit air carriers 
from commingling PFC revenue with other sources of revenue and require 
air carriers to establish separate trust accounts. Commenters viewed 
this proposal as the least costly of the three. The Metropolitan 
Washington Airports

[[Page 18933]]

Authority (MWAA) stated that establishing separate trust accounts would 
strengthen airport public agencies' claim to PFCs which had been 
collected. The MWAA preferred trust accounts to escrow accounts, if the 
PFC funds could be protected sufficiently through trust accounts. Other 
airports shared the MWAA's view. However, the commenters did not 
quantify the amount of additional cost that implementation of this 
proposal would entail to air carriers. Moreover, the degree of 
additional protection offered to public agencies from such trust 
accounts in the event of air carrier bankruptcy was not felt to be 
significantly greater than the current practice. Based on these 
comments, the FAA cannot determine if the benefits of implementing this 
proposal would justify higher costs to air carriers.
    The second proposal was to require that carriers establish third-
party escrow accounts to hold PFC revenue between collection of that 
revenue and remittance to the public agency. United Airlines indicated 
that this proposal would increase the air carrier's cost while reducing 
the compensation available to recover such cost. The FAA notes that 
public agencies, in their contractual arrangements with air carriers 
serving their airports, may require PFC escrow accounts or security 
deposits provided that such security requirements apply to the air 
carriers in a manner that is not unjustly discriminatory. However, the 
FAA does not have sufficient data on the costs or expected benefits of 
such accounts at this time to pursue mandatory implementation.
    The third proposal concerning bankruptcy would require the Airline 
Reporting Corporation (ARC) clearinghouse to remit PFC revenue directly 
to the public agencies when travel agencies' tickets are processed 
through the clearinghouse. This proposal presented a problem to some 
commenters because the majority of travel agency ticket sales are 
purchased with credit cards, with no funds being collected from the 
purchaser at time of sale. Travel agents report these credit sales 
through ARC without remitting any funds to ARC. The ARC clearinghouse 
bills credit card sales on the air carriers' behalf and reports the 
amounts billed to the air carriers. However, credit card issuers remit 
directly to the air carrier. At no point in this credit sale cycle does 
ARC have liquid funds from the credit card sales. As with the other 
proposals, the FAA does not have sufficient data on the costs or 
expected benefits of this proposal to pursue its mandatory 
implementation.
    In the ANPRM, the FAA proposed to implement the statutory 
prohibition on collection of PFCS from passengers traveling on frequent 
flyer awards that was promulgated in the Authorization Act of 1994. The 
FAA also proposed to change Secs. 158.45(a)(3) and 158.47(c)(4) to 
delete a provision in the original PFC rule that is no longer 
applicable under current industry ticketing practice. The FAA did not 
receive any opposition on these issues from air carriers or airports. 
The FAA notes that it already imposes the statutory requirement 
pertaining to non-collection of PFCs on frequent flyer award tickets in 
its PFC Records of Decision and the presence of the obsolete provisions 
has not adversely affected ticketing and remittance practices. 
Consequently, a separate rulemaking to address these issues may be 
postponed until the changes may be combined with other changes to Part 
158 when appropriate. The frequently flyer provision and technical 
correction to Secs. 158.45(a)(3) and 158.47(c)(4) will be implemented 
as part of a future rulemaking on the PFC program when the need arises 
to address additional issues by rulemaking.
    The final issue addressed changing the phrase ``remitted to'' to 
``received by'' when addressing the deadline for monthly transfer of 
PFC revenue from air carriers to public agencies. Commenters contended 
that using the term ``received by'' would make it easier for them to 
enforce late payment penalties. However the term ``remitted by'' is 
common and effective in several U.S. tax laws, so the FAA has denied 
this request. The FAA notes that a public agency's authority to 
establish due dates for receipt of remitted monies and collect 
penalties and interest on PFC revenue that is past due depends on local 
law or the public agency's contractual relationship with the air 
carrier, although the due date cannot be in advance of the requirements 
of Sec. 158.51. The FAA does not consider Part 158's silence on this 
subject to preclude the collection of penalties and interest based on 
local law or contract, and the FAA does not object to this practice as 
long it is applied in a manner that is not unjustly discriminatory.

Conclusion

    Therefore, as a result of reviewing comments to the ANPRM Notice 
No. 96-3, regarding the collection, handling, and remittance of PFCs, 
the FAA has decided to withdraw this ANPRM. Accordingly, the ANPRM, 
Notice No. 96-3, published on April 16, 1996 (61 FR 16678), is 
withdrawn.

    Issued in Washington, DC on March 31, 2000.
Catherine M. Lang,
Director, Office of Airport Planning and Programming.
[FR Doc. 00-8365 Filed 4-7-00; 8:45 am]
BILLING CODE 4910-13-M