Airport Financing

Pursuant to a congressional request, GAO provided information on the Department of Transportation's (DOT) procedures for handling fee disputes between airports and airlines, focusing on: (1) how these fees are set; (2) DOT's role in resolving disputes between airports and airlines over these fees; and (3) formal disputes that have arisen over airport fees in the past 14 years.

GAO noted that: (1) airport fees generally are set under two pricing approaches--the residual cost approach and the compensatory approach; (2) the residual cost approach guarantees that an airport will break even because the airlines pay the costs of running the airport that are not offset by other revenues; (3) the compensatory approach calls for airlines to pay only for what they use; (4) DOT relies on airports and airlines to establish fees and encourages the individual parties to resolve any differences through direct negotiation; (5) when airport operators and airlines are unable to resolve disputes over fees, there are two administrative options--an investigation by the Federal Aviation Administration (FAA) or an expedited review by the Office of the Secretary; (6) there have been few formal disputes over the fees that airlines pay to airports; (7) over the past 14 years, 14 such disputes have arisen; (8) complaints in eight of these disputes were filed since the passage of the Federal Aviation Administration Authorization Act of 1994, which established the expedited procedures at DOT for handling such disputes; (9) the Office of the Secretary addressed seven of the eight complaints under the expedited procedures; (10) it dismissed three complaints, issued decisions in another three, and one complaint was settled prior to a decision; and (11) FAA is handling the remaining case and is also considering separate issues raised in two of the seven complaints addressed by the Office of the Secretary.