2011-9229. Policy and Procedures Concerning the Use of Airport Revenue; Policy Regarding Airport Rates and Charges: Petition of the Clark County Department of Aviation To Use a Weight-Based Air Service Incentive Program

AGENCY:

Federal Aviation Administration (FAA), Department of Transportation (DOT).

ACTION:

Notice of petition; request for comments.

SUMMARY:

This notice requests comments on a petition to accept an air service incentive program at McCarran International Airport (Airport) as consistent with Federal law and policies on the use of airport revenue and on airport rates and charges. The petitioner Clark County Department of Aviation is the owner and operator of the Airport. The petitioner is the recipient of Federal grants under the Airport Improvement Program (AIP), and is subject to obligations under AIP grant agreements, including Federal law and policy on the use of airport revenue and on airport rates and charges. The FAA has interpreted these policies, and the underlying Federal statutes, to permit a temporary waiver of standard airport fees for carriers that provide new air service at an airport, as an incentive to begin or expand air service. The agency recently issued the Air Carrier Incentive Program Guidebook to provide specific guidance to airport operators on the use of air service incentive programs. That guidance restates FAA's previously issued opinions regarding what constitutes new service as characterized in the FAA's Policy and Procedures Concerning the Use of Airport Revenue (Revenue Use Policy) (64 FR 7696). Since the inception of the Revenue Use Policy in 1999, the FAA has defined new air service as: (a) Service to an airport destination not currently served, (b) nonstop service where no nonstop service is currently offered, (c) new entrant carrier, and/or (d) increased frequency of flights to a specific destination. The FAA's interpretation has not permitted an airport operator to offer an incentive program that provides discounts based on increased aircraft weight or an increased number of seats on existing flights. The petitioner proposes an incentive program that would reward air carriers for an increase in landed weight. An increase in landed weight could result from an increase in the size of aircraft used, or “upgauging,” on existing flights as well as from added flights. The petitioner requests that the FAA amend existing guidance to make clear that its proposed incentive plan is consistent with Federal law and general agency policies on the use of airport revenue and on airport rates and charges. The FAA is publishing this notice of the petition for public comment on whether agency guidance should be interpreted or amended as requested.

DATES:

Send your comments on or before May 31, 2011.

ADDRESSES:

You may send comments [identified by Docket Number FAA-2011-0361] using any of the following methods:

• Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your comments electronically.
• Mail: Docket Operations, U.S. Department of Transportation, West Building, Ground Floor, Room W12-140, Routing Symbol M-30, 1200 New Jersey Avenue, SE., Washington, DC 20590.
• Fax: [phone].
• Hand Delivery: To Docket Operations, Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

Privacy: We will post all comments we receive, without change, to http://www.regulations.gov,, including any personal information you provide. For more information, see the Privacy Act discussion in the SUPPLEMENTARY INFORMATION section of this document.

Docket: To read background documents or comments received, go to http://www.regulations.gov at any time or to Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

Stacy Swigart, Airport Compliance Division, ACO-100, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591, telephone [phone]; facsimile: [phone]; e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

An air service incentive program is a temporary reduction in the fees that an airport operator charges air carriers at the airport, or other temporary benefits for carriers, for the purpose of promoting new or additional air service. While incentive programs can take many forms, they may involve a waiver of fees that would otherwise be due, such as landing fees; cooperation and assistance in marketing new service; and a subsidy of air service if airport revenue is not used for that purpose. Because incentive fee waivers can result in differential fees charged to different air carriers for similar use of the airport, incentive programs can involve issues of compliance with Federal obligations regarding discriminatory treatment of air carriers and use of airport revenue.

On February 14, 2011, the Federal Aviation Administration (FAA) received a letter from counsel for the Clark County Department of Aviation, the owner and operator of McCarran International Airport in Las Vegas, Nevada, requesting a determination from the FAA that the Department of Aviation's proposed air service incentive program does not conflict with Federal obligations. As a matter of process, the agency has elected to treat the request as a petition to amend agency policy, and is publishing notice of the request for public comment before making a determination. However, the agency has made no determination on whether granting the Department of Aviation's request would or would not actually require amendment of any existing agency policy statements.

Background: FAA policy on use of airport revenue and airport rates and charges.

Airport sponsors that accept grants under the Airport Improvement Program agree to a set of standard grant assurances, as required by 49 U.S.C. 47107. These include an assurance that airport revenue will be used for the capital and operating costs of the airport or airport system, or certain other purposes. They also include assurances that fees charged air carriers will be reasonable, not unjustly discriminatory, and substantially comparable to fees charged other carriers making similar use of the airport. The FAA has issued comprehensive policies on each of these assurances.

The Department of Transportation published the Policy Regarding Airport Rates and Charges on June 21, 1996 (61 FR 31994). Portions of the policy were subsequently vacated by the United States Court of Appeals for the District of Columbia Circuit in Air Transport Ass'n of America v. DOT, 119 F.3d 38, amended by 129 F.3d 625 (DC Cir. 1997). In July 2008, the Department published a notice in the Federal Register adopting three amendments to the 1996 Rates and Charges Policy (73 FR 40430, July 14, 2008). The amendments are intended to provide greater flexibility to operators of congested airports to use landing fees to provide incentives to air carriers to use the airport at less congested times or to use alternate airports to meet regional air service needs. The policy as amended does not specifically refer to incentive programs or fee waivers, but provides in part:

3. Aeronautical fees may not unjustly discriminate against aeronautical users or user groups.

3.1 The airport proprietor must apply a consistent methodology in establishing fees for comparable aeronautical users of the airport. When the airport proprietor uses a cost-based methodology, aeronautical fees imposed on any aeronautical user or group of aeronautical users may not exceed the costs allocated to that user or user group under a cost allocation methodology adopted by the airport proprietor that is consistent with this guidance, unless aeronautical users otherwise agree.

3.1.1 The prohibition on unjust discrimination does not prevent an airport proprietor from making reasonable distinctions among aeronautical users (such as signatory and non-signatory carriers) and assessing higher fees on certain categories of aeronautical users based on those distinctions (such as higher fees for non-signatory carriers, as compared to signatory carriers).

The Department of Transportation and the FAA published the Policy and Procedures for the Use of Airport Revenue on February 16, 1999 (64 FR 7696). That policy, in paragraph VI.B.12, Prohibited Uses of Airport Revenue, prohibits the direct subsidy of air carriers with airport revenues, but notes:

Prohibited direct subsidies do not include waivers of fees or discounted landing or other fees during a promotional period. Any fee waiver or discount must be offered to all users of the airport, and provided to all users that are willing to provide the same type and level of new services consistent with the promotional offering. [64 FR 7720]

In September 2010, the FAA published the Air Carrier Incentive Program Guidebook: A Reference for Airport Sponsors. The Guidebook is available on the FAA Airports Web site. The Guidebook was issued to bring together in one place the principles behind FAA policy decisions on individual air carrier incentive programs. The Guidebook is intended to interpret existing policies on use of airport revenue and airport rates and charges, and not to establish new policy. Several statements in the Guidebook have possible relevance to the Department of Aviation's proposed incentive plan.

Specifically, for example, the Guidebook states that promotional incentives are limited to new service, and provides a definition of new service:

FAA defines new service as (a) service to an airport destination not currently served, (b) nonstop service where no nonstop service is currently offered, (c) new entrant carrier, and/or (d) increased frequency of flights to a specific destination. (In the last case, the incentive would be available only on the added flights.) FAA does not recognize repeated seasonal service, upgrade of equipment type, or increased number of seats on existing flights as new service.

The summary of prohibited practices reaffirms that incentives are not available for an increase in aircraft weight or seating not associated with an added flight:

Your Incentive Program may NOT:

• Offer incremental discounts based on weight for existing service
• Offer incentives based on incremental weight or increased number of seats on existing flights.

The Petition

The February 14, 2011, letter from counsel for the Clark County Department of Aviation requests that FAA determine that the Department's proposed air service incentive program does not conflict with Federal obligations, and attaches a 13-page memorandum in support of that request. The letter and memorandum are available for review on the FAA Airports Web site, as well as in the docket locations described under ADDRESSES in this document.

In brief, the Department of Aviation states that the “objective of the proposed Incentives Program is to provide an incentive at the margin to promote additions to scheduled air service seat capacity.” The program provides, subject to certain terms and exceptions, that:

* * * all monthly scheduled service landed weight, by airline, in excess of that operated in the same month of the prior year, would receive a credit of up to 100% of the landing fee (currently $2.26 per 1,000 pounds of landed weight) paid on the incremental landed weight.

In addition to new flights, the credit would apply to existing flights for which an increase in aircraft size resulted in an increase in landing weight.

Request for comments

The FAA requests comments on whether the petition can be considered consistent with agency policy on use of airport revenue and airport rates and charges, including policy statements contained in the Air Carrier Incentive Program Guidebook, and if so, whether the stated agency policy should be revised to permit the kind of air service incentive program proposed by the Clark County Department of Aviation.

Issued in Washington, DC on April 11, 2011.

Randall Fiertz,

Director, Airport Compliance and Operations.