Proceeds from one of the fees airline passengers pay when they buy a plane ticket have a better chance of ending up in the right hands under a new federal rule.
A change to the federal passenger-facility- charge program adds more protections for airports against bankrupt airlines that improperly spend revenue from passenger-facility charges.
Airports can charge up to $4.50 in passenger-facility charges for every passenger on a plane. It’s one of the fees tacked onto airfares. Airports use revenue from those fees to fund federally approved airport projects.
But Denver International Airport has run into problems when airlines have gone into bankruptcy.
Denver has been involved in the recent bankruptcy cases of United, Delta, Northwest, ATA and US Airways.
In several cases, “Denver has experienced the frustration of learning too late that a debtor air carrier has violated its fiduciary obligations and improperly spent the PFCs that were intended for Denver and other airports,” according to comments submitted by DIA last year.
In United’s case, when United parent UAL Corp. filed for Chapter 11 bankruptcy protection in 2002, the airline owed Denver about $13 million for landing fees, building rents and passenger-facility charges.
A bankruptcy judge ordered United to pay $4.7 million from passenger-facility charges to DIA.
But in cases such as United’s, Denver has had to hire outside counsel and local counsel, file motions and appear in court, racking up costs to get the passenger-facility-charge money.
United exited bankruptcy in 2006, but airports including DIA want airlines to set the money aside into a separate account, “so if airlines do go bankrupt, it’s easier for us to still get the PFCs,” said DIA spokesman Steve Snyder.
A final rule that adds protections of passenger-facility charges in bankruptcy proceedings, along with other changes, will take effect June 22.
The Federal Aviation Administration said it believes the airlines’ assertion that airports have no standing on passenger-facility-charge revenue in bankruptcy cases is “ill-founded,” and the agency’s new rule requires airlines to segregate their PFC revenue into a separate account.
Meanwhile, a coalition of airport and aviation groups has been trying to push Congress to raise the cap on the passenger-facility charge from $4.50 to $7.50 to fund more airport-improvement projects.
Airlines have opposed the change, which could increase airfares.
Staff writer Kelly Yamanouchi can be reached at 303-954-1488 or kyamanouchi@denverpost. com.
