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The Future Of Landing Fees?  
User currently offlineWingedMigrator From United States of America, joined Oct 2005, 2212 posts, RR: 56
Posted (6 years 11 months 1 week 1 day 19 hours ago) and read 4962 times:

I've been wondering about the future of landing fees at saturated hub airports, something that started in the course of discussions about the economic pros and cons of very large aircraft. Leaving aside aircraft questions, and focusing purely on airport operating economics (and also keeping in mind that I'm not an economist Big grin ) I'd be interested in feedback on the following thoughts.

Landing fees today are priced by airports that are usually public entities (i.e. run for, possibly even by, a government). The price of a landing appears to be highly regulated in sometimes elaborate schemes that do not have as their basis the profit motive-- i.e. they are not market driven, but are intended to impose a desired outcome such as minimal noise, or fewer small aircraft, or balancing the airport's budget, etc. or even worse, they simply amount to passive rents. Some fee formulas I've heard about are dollars per pound of landing weight, or dollars per pound of MTOW... that kind of pricing clearly bears little resemblance to the real prices that airlines would pay to land various airplane types at various times of the day. The very real scarcity of landing resources at saturated hub airports thus benefits mainly the airlines, rather than the airports, because airlines get to charge higher ticket prices to carry customers to desirable yet saturated airports. In stark contrast, a couple of first-class fares will cover the landing fees for a 747 at the most expensive airports in the world.

If airports are privatized (or at least run by private, profit-oriented entities) and fees become entirely market-driven, with airport resources (runway time, maintenance, ATC, etc.) being sold to the highest bidder, what will happen? I assume that the simple fee formulas like $/lb would be quickly forgotten... Saturated hub airports could reap the benefit of the scarcity of their own resources, and charge higher fees to airlines. The fees would still be passed through to ticket prices, but the airport operator's cut would increase at the expense of the airline's cut. Landing fees might change quite drastically, as the true cost of operating airport infrastructure gets allocated and optimized by market forces.

Just what is likely to happen over the next decade? What are the economic trends out there, in the field of airport operations at large hubs? Who's interested in the status quo, and who is agitating for change? How will landing prices change? Thanks for any insight.  airplane 

14 replies: All unread, jump to last
 
User currently offlineCentrair From Japan, joined Jan 2005, 3598 posts, RR: 20
Reply 1, posted (6 years 11 months 1 week 1 day 18 hours ago) and read 4930 times:

I don't know too many details but the landing fee issue is a big deal for the big three Japanese airports.
NRT: Way over priced
KIX: Started high but as dropped
NGO: Low but not low enough

IATA has been pushing for more privitization of the airports. NGO is not 100% private but it is more privitized than KIX or NRT. The management is a former Toyota man who doesn't like Aichi government sticking its nose into its profitabiltiy and operations. He is very fiscally conservative.

In 2004
Top 12 Landing fees (US$)
1) NRT $8,777
2) YYZ $8,203
3) KIX $7,643
4) BHX $7,035
5) WAW $5,954
6) LGA $5,731
7) OSL $5,510
8) SHA $5,465
9) PVG $5,465
10) PEK $5,465
11) CAN $5,465
12) VIE $5,463

NGO opened in 2005 and posted its landing fee at JPY655,700 for a 747-400. (US$5,644.92). On the above scale it would become number 7.

Does anyone have an updated list of landing fees?

On Airport privatization...here is a document (PDF) on it from IATA. Airport privatisation



Yes...I am not a KIX fan. Let's Japanese Aviation!
User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 2, posted (6 years 11 months 1 week 1 day 18 hours ago) and read 4907 times:

Most large government run airports are not 'profitable' even with high fees.

Privatization may require higher fees or cuts in services to be profitable.

A few of the very top airports might to very well in private hands.

The vast majority of airports will do poorly and services will decline significantly.

Privatized general aviation airports will not be successful.


User currently offlineSEPilot From United States of America, joined Dec 2006, 6834 posts, RR: 46
Reply 3, posted (6 years 11 months 1 week 1 day 11 hours ago) and read 4832 times:

Actually, I think landing fees at congested airports (such as JFK) should be flat, rather than based on weight. That way, if an RJ has to pay the same as a 747 it will encourage more use of large planes and reduce the congestion. It is how GA has been discouraged from landing at busy airports; I can land my 182 at Logan but it will cost me about $100 to do so. You can guess how many times I have (or will) done so. If I had to pay the same as a 747 I would be even less likely to do so. Where uniform public access is required by law (as it is in the US) which will make slot restrictions problematic, this would be the best way to bring capacity and usage in line.


The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineCoolGuy From United States of America, joined Jan 2005, 414 posts, RR: 0
Reply 4, posted (6 years 11 months 1 week 1 day 10 hours ago) and read 4802 times:

Quoting SEPilot (Reply 3):
I can land my 182 at Logan but it will cost me about $100 to do so.

Do you have any other examples for a 182? How about LGA, JFK, EWR, ORD, etc. Is there a list? I'd love to have that opportunity at BOS or any other large airport.

The assumption I've always had is that the fees are generally low for a small aircraft but it's impossible to actually obtain a slot.

[Edited 2007-08-27 17:04:19]

User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 5, posted (6 years 11 months 1 week 1 day 10 hours ago) and read 4788 times:

JFK used to have a system / block of time for small GA - specifically to allow pilots to get a landing and takeoff in their log books.

It was a certain time of day when things were slow - and only in good weather with low winds.

Here is a quote from an AirNav report:

"From Mathieu Romana on 07-Jun-2006
Flew in and out IFR and IMC after 10pm one evening to pick-up friends, and in and out the next day again, VFR around 2:00pm. ATC and Port Authority staff, friendly and efficient. Landing fee for SR22 (Cirrus) $25, parking $25 per 8 hours (first hour free). Operations between 3:00pm and 10:00pm are charged an extra $100."

Call the Port Authority GA Terminal / FBO - 718-244-4111


User currently offlineTom in NO From United States of America, joined Nov 1999, 7194 posts, RR: 33
Reply 6, posted (6 years 11 months 1 week 1 day 10 hours ago) and read 4777 times:

Quoting WingedMigrator (Thread starter):
they are not market driven, but are intended to impose a desired outcome such as minimal noise, or fewer small aircraft, or balancing the airport's budget, etc. or even worse, they simply amount to passive rents.

At least here in the US, the landing fee is what is used to balance the airport's budget. Here at MSY, we'll suppose a certain level of revenue for the year by summing up non-aeronautical rents (garage, rental cars, concessionaires, etc), and then derive an assumed amount of expenditure for the same period. The difference is how the landing fee is derived.

Quoting WingedMigrator (Thread starter):
Some fee formulas I've heard about are dollars per pound of landing weight, or dollars per pound of MTOW...

That's the way we've always done it at MSY.....and that's the way it's done at most airports.

Quoting WingedMigrator (Thread starter):
with airport resources (runway time, maintenance, ATC, etc.) being sold to the highest bidder, what will happen?

For one thing, the FAA would throw a fit. With the investments they've made in airport infrastructure, they don't cotton to an airport operator attempting to sell out.

Quoting WingedMigrator (Thread starter):
Landing fees might change quite drastically, as the true cost of operating airport infrastructure gets allocated and optimized by market forces.

As stated above in my comment around revenue derivation, the landing fee can vary from year to year by quite a bit. Not too many years ago, our landing fees dropped by something like 300%, simply because we began deriving a lot more revenue from our non-aeronautical sources.

Tom at MSY



"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
User currently offlineSEPilot From United States of America, joined Dec 2006, 6834 posts, RR: 46
Reply 7, posted (6 years 11 months 1 week 1 day 10 hours ago) and read 4762 times:

Quoting CoolGuy (Reply 4):

Do you have any other examples for a 182? How about LGA, JFK, EWR, ORD, etc. Is there a list? I'd love to have that opportunity at BOS or any other large airport.

The assumption I've always had is that the fees are generally low for a small aircraft but it's impossible to actually obtain a slot.

I believe that slots for VFR arrivals do not exist at any US publicly funded airport-anyone can request to land and be handled on pretty much a first come/first serve basis-with the caveat that IFR arrivals have priority (and since by law all airline flights are IFR they have priority.) If you file IFR you will be placed in the flow regardless of who you are. I used Logan as an example because that's the one I'm familiar with, but I'm sure that most large airports are similar. Slightly smaller ones, such as BDL, have no such problems; in fact, I love flying there and have never had any problems (they have no landing fees for single engine aircraft.) You need to find the policies and fees for each airport at which you desire to land.
By the way, only part of the cost at BOS is the landing fee. You also have a ramp fee (that will be waived if you purchase a minimum amount of gas, but the price premium on the gas comes close to the ramp fee.) I do not remember the specific figures, but it amounted to about $100 several years ago; it may be more now.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineLTBEWR From United States of America, joined Jan 2004, 13040 posts, RR: 12
Reply 8, posted (6 years 11 months 1 week 1 day 10 hours ago) and read 4758 times:

Politicians who have a say as to fees are are a part of the problem. Airlines influence and get the attention of politicians with their campaign contributions to hold down the fees to hold down their costs. Those contributions may be only a fraction of what they can save, so it is a good investment. Constituents who use the airport want the lowest fees possible to hold down fares and fees, while non or infrequent users hope the costs to operate the airports are paid for by the users and not from their taxes. Privatizing airports or under special authorities has is own problems with profits more important than service and making concourses into shopping malls selling overpriced merchandise. You also have local and regional governments that may desire lower fees to hold down fares and ops costs to attract airlines, visitors, business persons, and airlines to use their airports as hubs, or to move business to less used airports from the main ones in their areas.

To me, landing fees should be a formula as to the time and day of the slot, the true costs of the services needed for the flight, the number of passengers, the overall budget needs of the airport to reduce the costs to the general public.


User currently offlineTom in NO From United States of America, joined Nov 1999, 7194 posts, RR: 33
Reply 9, posted (6 years 11 months 1 week 1 day 9 hours ago) and read 4737 times:

Quoting LTBEWR (Reply 8):
You also have local and regional governments that may desire lower fees to hold down fares and ops costs to attract airlines, visitors, business persons, and airlines to use their airports as hubs, or to move business to less used airports from the main ones in their areas.

Obviously it is our intent, as airport owners and operators, to try and keep our costs as low as possible, yet still be able to safely operate and grow our airport. That said, as a government agency that has millions invested by the FAA, we are bound by law to operate at a break-even level. We are not subsidized by local tax revenues, which means we must generate our revenues from within. The airlines know and understand this.

Quoting LTBEWR (Reply 8):
To me, landing fees should be a formula as to the time and day of the slot, the true costs of the services needed for the flight, the number of passengers,

Tying a landing fee to a time of day, etc would probably be perceived by the FAA as discriminatory. It's one thing to attempt to restrict by noise levels, totally different to try to price based upon what time of day an airport operator wants to see more or less flights, or bigger or smaller aircraft.

Regards the true costs of services needed for the flight, as the airport operator, we simply charge for the use of the gate, landing fee, etc. Charges for other services needed (fuel, aircraft servicing, etc) are paid to the ground service company providing that service, a fuel flowage fee is paid back to the airport operator.....of course, servicing fees are retained by the FBO.

Tying a landing fee to the number of passengers is a very risky proposition. Consider our case.....in 2001, we were on pace to pass 10 million pax for the first year. 9/11 took away that likelyhood. In 2005, we were again on pace to top 10 mill.....this time Katrina took away that likelyhood. With the types of leases we have with our concessionaires (usually a combination of minimum guarantee, or a percentage of revenue), space rentals with our airlines (paid according to the signed lease, with no increase or decrease based on number of pax), a garage revenue that is fairly consistant from year to year.....linking such a variable as passenger numbers into a budgeting system that already works well enough pretty much defeats the purpose. Also, there is motivation for the airlines to fill their airplanes. In our case, the airlines haven't needed to do much to fill their airplanes, at least into or out of MSY.....they come and go full.

You do, though, present some compelling thoughts.  smile 

Tom at MSY



"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
User currently offlineCoolGuy From United States of America, joined Jan 2005, 414 posts, RR: 0
Reply 10, posted (6 years 11 months 1 week 1 day 8 hours ago) and read 4707 times:

Quoting SEPilot (Reply 7):
If you file IFR you will be placed in the flow regardless of who you are.

It's really that simple? Just file an IFR flight plan and you're all set to land at BOS, JFK, etc.?


User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 11, posted (6 years 11 months 1 week 1 day 8 hours ago) and read 4701 times:

Quoting CoolGuy (Reply 10):
It's really that simple? Just file an IFR flight plan and you're all set to land at BOS, JFK, etc.?

You better call ahead and check for local procedures.

If you bring that C172 into KDFW without prior notice, you will have to maintain 160 KIAS on approach, or lose you place in the landing line.


User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 12, posted (6 years 11 months 1 week 1 day 6 hours ago) and read 4654 times:

I know that right now, they are in the early stages of renegotiating the landing fees @ ATL. The current fee structure expires in 2010. As is currently stands, ATL's landing fee is 16 cents per 1,000 lbs, which is the lowest of any major US airport, and has been the standard rate @ ATL for quite a few years. Here's a recent article regarding the landing fees @ ATL.


http://www.airportbusiness.com/web/o...fee-at-airport--audit-says/1$13623


User currently offlineSEPilot From United States of America, joined Dec 2006, 6834 posts, RR: 46
Reply 13, posted (6 years 11 months 1 week 1 day 5 hours ago) and read 4633 times:

Quoting CoolGuy (Reply 10):
It's really that simple? Just file an IFR flight plan and you're all set to land at BOS, JFK, etc.?

I believe it is; but you'd better be prepared for the fees. Also be thoroughly familiar with the airport layout, especially taxiways. The ground and tower controllers expect competence; they rattle off instructions and expect you to understand and follow them; they can be very impatient with pilots who don't know exactly what they are doing (I got this from pilots who have landed at BOS.) If you file a flight plan and ATC accepts it you obviously can go wherever you filed. If you can't go there (like a military field) they won't accept the flight plan.



The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
User currently offlineWingedMigrator From United States of America, joined Oct 2005, 2212 posts, RR: 56
Reply 14, posted (6 years 11 months 1 week 21 hours ago) and read 4546 times:

Quoting Centrair (Reply 1):
On Airport privatization...here is a document (PDF) on it from IATA. Airport privatisation

That's a real interesting read, especially considering who wrote it (an airline trade group). Not surprisingly, the airlines dislike the prospect of increased fees, and they view any liberalization of airport operations as a huge risk of monopoly, coming at their expense. They see privatization as being appropriate only in the context of smoothing the workings of what must fundamentally remain, from their point of view, a non-profit enterprise. They say privatization must be 'in the public interest' rather than a 'revenue raising exercise'.

The thing is-- the airlines are cashing in all the real, valuable, tangible benefits that arise from the scarcity of landing resources, while arguing that the airports should not be allowed to profit from the same. One could say that it is unfair to the airports (either to the private concessionaires, or the taxpayers) that they cannot share in those benefits... and that this constitutes a subsidy to the airlines. I doubt that airlines would hold themselves to the same standards that they hold airports, i.e. to operate 'in the public interest' without becoming 'revenue raising exercises'... One can easily imagine what their shareholders would have to say about that!

Just how substantial is the risk of an airport charging monopoly rents to their 'captive customer base'? Would that truly align with an airport's profit motive? (provided there even was an airport with a profit motive, as the airlines seem determined to prevent?)


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