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07 November 2018
On 5 October 2018 President Trump signed into law the Federal Aviation Administration (FAA) Reauthorisation Act of 2018. The act, which has wide-ranging implications for the aviation industry, will fund the FAA for the next five years. The legislation affects, among other issues, aviation-related consumer protection, labour law, airline fees and disability accommodations in air travel. This article focuses on provisions in the act that affect airline fees, including some that were omitted from the final legislation but will continue to be considered in future.
Within the next year, the Department of Transportation (DOT) must promulgate regulations requiring airlines to refund passengers any ancillary fees paid for services relating to air travel that the passenger does not receive. This includes baggage fees as well as fees on a passenger's scheduled flight, replacement itinerary or a flight not taken by the passenger.
The rulemaking must be initiated before October 2019. However, the DOT could use its enforcement authority to prohibit airlines from refusing to refund ancillary fees where a service was not provided to the passenger.
The proposed forbidding airlines from imposing ridiculous (FAIR) fees provision was not included in the final act. FAIR fees, which was introduced by Senators Richard Blumenthal (D-Conn) Edward Markey (D-Mass) and Roger Wicker (R-Miss), would have prohibited airlines from imposing fees that are unreasonable or disproportional to an airline's costs and would have required the DOT to establish standards to assess reasonableness and cost proportionality. The measure would have applied to all airline ancillary fees, including reservation change or cancellation fees, checked baggage fees and seat selection and reservation fees. The language was included in the Senate-passed version of the act but was eliminated in the final version.
The FAIR fees provision was strongly supported by the three senators and other members of Congress, who may reintroduce some version of the legislation in future.
Despite lobbying from airport groups, the act did not increase the passenger facility cap (PFC), which remains at $4.50 per flight segment, as it has been since 2000. PFCs are not airline fees, but rather FAA-approved charges that airlines must add to fares for itineraries involving specific US airports that have been authorised to impose a PFC. Airlines collect PFCs and remit them to the airports. Airports use PFC fees to fund FAA-approved projects that enhance safety, security or capacity and have consistently lobbied for a PFC cap increase since 2000. While there was a proposal to increase the cap to $9.00 per segment, it was strongly opposed by airlines and ultimately it was not included in the final version of the act.
Airports are likely to continue to push for (and airlines against) a higher PFC cap.
For further information on this topic please contact David Heffernan or Matthew J Howell at Cozen O'Connor by telephone (+1 202 912 4800) or email (firstname.lastname@example.org or email@example.com). The Cozen O'Connor's website can be accessed at www.cozen.com.
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