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Obama May Propose $1.1 Billion Cut in Airport Grants

Obama may ask Congress to let airports make up for the $1.1 billion in proposed cuts by raising ticket fees to $7 a flight segment. Photographer: Richards/AFP/Getty Images
Obama may ask Congress to let airports make up for the $1.1 billion in proposed cuts by raising ticket fees to $7 a flight segment. Photographer: Richards/AFP/Getty Images

Feb. 9 (Bloomberg) -- President Barack Obama may propose a $1.1 billion cut in airport construction grants in his Feb. 14 budget, a 31 percent reduction, as he tries to freeze discretionary spending outside defense, an airport group said.

Obama may ask Congress to let airports make up for the cut by raising airline passenger ticket fees to as much as $7 a flight segment from the current $4.50, according to people familiar with the matter.

Parts of Obama’s proposal would draw opposition from airports and airlines and may face long odds in Congress, which has resisted airport grant cuts and passenger fee increases.

Obama is trying to propose a federal budget that will allow more spending to update the air-traffic control system, a top aviation priority for the administration, while adhering to his call for a five-year freeze on discretionary spending outside of security and national defense.

A $1.1 billion cut in airport construction grants, now funded at $3.5 billion, “would obviously have an impact” on airports in all parts of the country, Kelly Johnson, vice chairwoman at the American Association of Airport Executives, told the U.S. House aviation subcommittee in testimony today.

The group in its testimony endorsed an increase in the so-called passenger facility charge, which also helps pay for construction projects. Congress since 1990 has allowed airports to charge the fees, initially set at $3 for each segment of a flight. Congress in 2000 raised the cap to a maximum of $4.50. Airlines include their fees in their ticket prices.

Airports collected $2.8 billion from the fees last year, according to the airports group, citing Federal Aviation Administration data. Increasing the fee cap to $7 would allow airports to bring in an additional $1.3 billion a year, according to the group in its testimony.

The people who described Obama’s plan to recommend raising the fee to $7 requested anonymity because the proposal has not yet been made public.

To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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