USA: Why don't airports raise landing fees to make up for low passenger fees?

Question

A question from travel.stackexchange.com about luggage carts prompted a discussion on the economics of airports. The gist was:

American airports have much lower passenger service fees which are capped at USD4.50 per FAA rules than foreign airports, which can easily be USD20-50 per person. This results in much lower number of amenities at American airports compared to other international airports.

You’d think they’d try to make it back with landing fees. But Tokyo Narita airport’s landing fee is JPY1550-2000 yen per tonne. A 787-8 has a weight of 172 t so the fee would be ¥258,000 - ¥344,000 or so or roughly USD2300 - USD3100. San Francisco SFO’s landing fee is USD5.54 per thousand pounds. A 787-8 landing weight is 379,200 pounds so the landing fee is around USD2100. There doesn’t appear to be a significant delta here to account for the difference in passenger fees.

My question is: Why don't airports simply increase the landing fees to compensate for the lower per-passenger fees?

Answer 1

This depends on where you are in the country and more specifically who controls the airport. A lot of airports in the US are owned by cities (or local governments) in some capacity. As such changing the landing fees often requires a legislative change which is not always easy. For example here is the legislation that covers the landing fees at both major airports Philadelphia Controls

Changing these requires a policy change at the government level and it takes a long time to get just about anything through the Philadelphia government. In many cases these fees are paid to the municipality anyway and the airport never sees any of the money so the fees don't (directly) help the airport. In a lot of cases the fees do (or at least are presumed) to go back to the maintenance and upkeep of the airport.

Private airports (generally smaller GA ones) can levy fees as they see fit and sometimes do to help with the upkeep of the field.

What airports or more specifically FBO's and other on field operators do is raise operational costs to use their facilities. Rising FBO fees have been of concern lately and sometimes there is no way to escape them if someone has what amounts to all the parking space on the field. It may only cost $5 to land somewhere but keeping your plane there for a while, getting a pre-heat, maybe even using a terminal is by no means cheap.

Answer 2

Fee setting is complicated. First, it should be noted the $4.50 per flight segment PFC charge is not intended to provide for terminal amenity improvements. As described by the FAA, the stated purpose of the Passenger Facility Charge (PFC) Program is:

Airports use these fees to fund FAA-approved projects that enhance safety, security, or capacity; reduce noise; or increase air carrier competition.

In addition, the structure of how landing fees are imposed varies. This article provides a good overview of how US airports set fees. Airports set the landing fee based on airfield costs. This guidance can also be found directly from the FAA.

h. Airfield Revenue. Unless users agree otherwise, airfield fees generally may not exceed the airfield capital and operating costs of existing airfield facilities and services.

Why don't airport simply raise landing fees? Airports do impose fees, just not through the landing fee mechanism. Looking at the Port of Seattle's Schedule of Fees, we can see the other fees the airport collects from airlines.

Answer 3

I think it's simply because passengers don't want to pay for free carts. Ultimately, all costs are going back to the customer via fares.

It's similar to raising ticket prices and bringing back "free" food or check-ins or extra legroom; certain people in certain situations will go for it, first class or business travel, but the market has shown that most will instead choose the option with lower fares.

Instead of the airport forcing everybody to pay for it, airlines are free to offer it themselves. In fact, airlines will have somebody carry your luggage from your house to check-in, if you buy the right ticket.