CHICAGO -- Northwest Airlines has filed the first challenge to airport passenger facility charges by asking a federal court to halt the collection of fees at Minneapolis-St. Paul International Airport and Memphis International Airport.
"In principle we oppose" the passenger facility charges, said Doug Miller, a Northwest spokeman.
"Airline passengers don't need another tax on top of the 10% they're already paying."
Northwest last week filed petitions in the U.S. Court of Appeals in Washington, D.C., asking the court to set aside the Federal Aviation Administration's orders authorizating collection of fees in Minneapolis-St. Paul and Memphis, according to Barry Molar, an FAA attorney.
In 1990, Congress passed a law enabling the FAA to allow airports to impose a passenger facility charge ranging from $1 to $3 per enplaned passenger. The fees apply to passengers whose flights originate at a specific airport or who make connections through the same airport.
Mr. Miller said that by law Northwest had to file the petitions within 60 days after airlines were notified the passenger facility charges would be collected. The FAA approved passenger facility charges at the Minneapolis-St. Paul and Memphis airports, as well as four other airports, on March 31. The Memphis and Minneapolis-St. Paul airports began collecting the fees June 1.
Mr. Miller said the fee puts the airline at a disadvantage competitively. He added that Northwest has not decided whether it will proceed past the petition phase of its challenge by filing a lawsuit.
Tom Anderson, attorney for the Minneapolis-St. Paul Airports Commission, said Northwest's challenge may endanger the commission's ability to finance improvement projects.
"Filing the [petition] places a cloud over funding our capital projects," Mr. Anderson said.
Even though Congress allowed the leveraging of passenger facility charges for bonds, Steve Busch, finance manager for the Minneapolis-St. Paul Metropolitan Airports Commission, said the airports commission does not plan to issue debt off of the fees.
"The intent is to avoid issuing additional debt. If for some reason the FAA does not approve all of the projects, then we will have to go back to the drawing board. We may have to refer to bonding or other alternative sources" of revenue, Mr. Busch said.
The airports commission originally submitted a request to the FAA that would allow it to collect $70 million over 33 months, Mr. Busch said.
In March, the FAA approved $23 million to be used for reconstruction of airport roadways and deferred action on $45 million to be used for a ground transportation project. A decision is expected by the end of June, Mr. Busch said.
Northwest filed the challenge despite being the recipient of a $620 million taxable and tax-exempt bond package that Minnesota and the airports commission agreed to issue to help refinance the airline's debt and build two Northwest maintenance facilities in the state.
In April, the commission lent Northwest $45 million from the commission's construction fund, along with proceeds from $270 million of taxable bonds issued to help Northwest refinance its debt. The $45 million was used as bond reserves for the $270 million of taxable bonds.
Besides the Minneapolis-St. Paul and Memphis airports, passenger facility charges also are being collected from Muscle Shoals Regional Airport in Alabama, McCarran International Airport in Las Vegas, Capital Airport in Springfield, Ill., and Huntsville International Airport in Alabama, Mr. Molar said.
The ability of airports to issue bonds secured solely by passenger facility charges has raised concerns with Standard & Poor's Corp. The rating agency has reported bonds backed by the fees could be thrown into question because the U.S. secretary of transportation can pull the charges from the airports if it is determined the funds are being used improperly.