Expert Webinar: Optimizing Landing Fees for Airlines & Airports
Chris Maccarone, PASSUR VP Finance and Performance Analysis (read Chris’ bio here) discussed the best way to use the latest version of the PASSUR Landing Fee Management platform to ensure complete, timely and accurate capture of landing fees – with a particular emphasis on the migration path from auditing self-reported landing fees to fully automated billing of landing fees without self-reports.
Brad Van Dam, AAAE Senior VP Federal Affairs provided an update on the FAA Reauthorization and thoughts on the Passenger Facility Charge (PFC) front.
Landing fees can represent over 20% of an airport’s annual revenue yet PASSUR audits of more than 20 airports show that between 1% and 4% of their landed weight annually remains uncollected. The PASSUR Landing Fee Management Program provides assurance and validation that all fees owed are being captured and assigned to the right airlines through a completely independent, data-driven, detailed review of all operational activity that makes up the airport’s landing fee revenue.
- When airports do not collect landed, billable weight, the reporting airlines collectively pay more to make up the difference.
- When airports DO capture all the billable operations, airline fees remain stable or even go down — because the cost of the airfield is spread over a larger pool of landed weight.
- For airports, the program provides faster revenue capture, fiduciary accountability, revenue predictability, and more efficient and fair service to airline stakeholders.
- For airlines the program ensures that they pay only their fair share and nothing more: that their individual fees could go down while the airport collects all that is owed; and that the time and effort required to manage their fees are reduced.
Landing Fee Management Billing: Opportunity and Benefits
- PASSUR’s LFM platform provides an opportunity to move from audit mode to automated billing, with the benefit of no longer relying on self-reports, providing the freedom to bill from PASSUR data.
- This provides a reduction in workload due to less comparison of self-reports, less data entry, and no longer segmenting out Carrier Incentive Programs. In turn, this allows airports to collect cash even sooner.
- An additional benefit for airports is the ability to standardize and automate the billing process. This eases the transition for airport employees and reduces the risk associated with employee turnover.
- For airlines, the benefits are:
- Assurance that they are paying only what is owed, and no more.
- All users are being fairly assessed their fees based on actual usage.
- The process is standardized and automated, reducing their labor and time requirements.
- The same process is used at many of the airline’s airports across their network – for even greater efficiencies.
- All the large US airlines already use PASSUR data and solutions for traffic management, adding to their level of comfort with, and trust in, PASSUR data for landing fee management.
Billing: What is Different
- Airports review invoices online and finalize them. Once they are finalized, they are un-editable (except by PASSUR).
- Carriers can access their invoices (and only their invoices) via URL to PASSUR’s application. If there are any concerns, the carrier raises the issue with the airport, who, in turn, has PASSUR investigate.
- The airport then selects/initiates the “month-end transfer file,” which is the CSV data feed directly into airport’s financial system. Invoices are generated by the airport’s system, not by PASSUR, and the data feed ensures dollar values from PASSUR detail matches the airport’s dollar value.
- Language around collecting landing fees varies by airports. Some simply state, “landing fees are collected.” Others include flexibility, e.g., “landing fee billed amounts will be provided either by the airport or by the carriers”. Others are explicit, e.g., “PASSUR data will be used for invoicing”.
- Some carriers submit variable Max Landing Weights, for example based on passenger/fuel/cargo load for that flight. PASSUR provides the “max” of the maximums.
- In all cases, PASSUR is able to work with existing Use/Lease agreements to accommodate existing language to implement the Landing Fee Management Platform.
- PASSUR actively supports the transition to LFM billing. Steps include:
- Prepare transition timeline
- Support communication plan to carriers
- Train airport and local carrier personnel
- Program data to be compatible with the airport’s financial system
- Program “transfer” rules to map regionals to mainline invoices
- The transition requires minimal airport IT involvement. There is a one-time project required to set up the process to integrate PASSUR’s monthly landing fee data file into airport’s financial system, and then nothing else is required of IT (for example there is no hardware and no software needed).
Gate and Seat Reports
- Unlike landing fees, there is no industry standard for how to bill turns and parks.
- Although gate/park revs are ~5% of landing fee revenue, it takes more manual time/effort to prepare gate reports.
- There is uncertainty if flights that use a leased gate on one end are actually using a non-leased (hence billable) gate on other end.
- Uncertain if “pockets of time” exist during the day when gates could be available for new carriers, e.g., preferentially leased gates.
With PASSUR Gate and Seat Reports:
- Ops no longer needs to track flights and send to finance.
- Finance no longer needs to input ops info into e-form.
- Reports include, among others:
- Turns per gate
- Seats per gate
- Seats per concourse
Primary uses of the Gate and Seat Reports:
- Track asset utilization – ensure gates being used most efficiently.
- Gate use compliance – ensure gates being used according to the use and lease agreements.
- Terminal concessions planning: ensure traffic volumes and patterns matching the current or future concessions plans and other terminal services.
FAA Reauthorization and PFC Update
The FAA Reauthorization debate has stalled over the plan to privatize ATC. Congress has agreed to another extension, which funds the FAA through FY 2017, providing stability for AIP. Congress is expected to resume consideration of the FAA bill in 2017.
There has been some movement on the PFC front:
- In the House, a proposal for a modest increase.
- In the Senate, a proposal to lift the PFC cap completely, but also reduce AIP funding
- Airports are exploring the idea that they could take over the PFC charges directly, thus removing the association of the PFC with the airline ticket.
- Airports may need to explore other financing options to upgrade aging facilities and accommodate increasing demand.
If you have any questions about the webinar discussion, contact Chris Maccarone by email or call 203.989.9862.