Aviation commissioner lobbies for increase in $4.50-a-head airline ticket tax
During a virtual speech to the City Club of Chicago, Jamie Rhee said she’s confident air travel will bounce back from the pandemic enough to justify the $8.7 billion O’Hare modernization plan.
Chicago Aviation Commissioner Jamie Rhee is lobbying for an increase in the $4.50-a-passenger ticket tax to bankroll airport improvements and expressed confidence that air travel will bounce back from the pandemic, justifying the $8.7 billion O’Hare modernization plan.
Mayor Lori Lightfoot has said repeatedly she remains fully committed to the massive O’Hare expansion project she inherited from Mayor Rahm Emanuel.
That’s even after former U.S. Transportation Secretary Sam Skinner, who co-chaired Lightfoot’s economic recovery task force, warned the City Club of Chicago in September the airlines are “facing the biggest challenge in their history — bigger than faced after 9/11, as big as it was.”
Airline industry analysts have also argued the “Taj Mahal” project will need to be delayed or dramatically scaled back because airlines decimated by the coronavirus can no longer afford their share of the $8.7 billion worth of improvements.
Rhee used her own virtual forum before the City Club of Chicago last week to paint a far more optimistic picture.
The commissioner acknowledged April 2020 “represented the low point for airline capacity, falling to 24%” for airports nationwide compared with the same figures a year earlier.
But she argued at the meeting Wednesday that Chicago has “gained most of its destinations and connectivity back and is rebuilding schedules and passenger activity.”
Most “previously linked destinations are still being served, just at lower frequency levels,” she added. “Ever so slowly, a recovery has begun to emerge.”
Rhee noted the aviation industry has bounced back before from “disruptions” ranging from terrorist attacks to fuel shortages, and will do so this time.
“People want to travel. People need to travel,” Rhee said. “The pace of recovery will vary and is not yet certain. But aviation is resilient, and Chicago’s airports are particularly so.”
Vowing to “build responsibly” and be “good stewards” of airport resources, she said: “We’re gonna work lockstep with our airline partners and federal partners all the way. ... It’s so important that we invest in our airports now to make sure that we remain competitive for the future against all or these other airports out there vying for this business.”
During the question-and-answer session, Rhee was asked what she would like to see from Congress and the incoming Biden administration to keep O’Hare and Midway “growing and competitive.”
“One of the things I’ve pushed really hard on — and I thought we were close last year — was an increase in the passenger facility charge,” commonly called a “ticket tax.”
“That has not been increased in nearly 20 years. It’s at $4.50,” Rhee said.
“It takes a lot to maintain common areas within the airports. And to have a dedicated revenue source” through the facility charge, she said, adding that “just a modest increase ... would allow O’Hare the flexibility. … There’s a lot of infrastructure needs out there that need to be met and very limited resources.”
A former chief procurement officer, Rhee also made a strong push for relaxing the standards to qualify as a disadvantaged business enterprise at the federal level.
A percentage of airport contracts are set aside for those businesses, but federal standards and city programs in those areas don’t align. Rhee said the federal rules need updating.
The federal rules govern contracts paid for with federal money, but the ticket tax, though set by Congress, is collected and spent locally — some of it on contracts awarded to businesses owned by minorities and women.
Rhee wants Congress to increase that tax but not take away local control of the money.
“I would resist making them federal money where our [disadvantaged business enterprise] program applies, so that we’re not able to use those local hiring programs.”
Rhee argued Chicago has “one of the more robust” minority business programs in the country. It’s working at O’Hare, in part, because the city is “unbundling” larger contracts into smaller ones.
“Of the 20 airport capital improvement projects set to be bid out over the next two years, we expect that half will be aimed exclusively for the small- and mid-sized business community,” she said.
“We could not and did not allow COVID to derail our commitment to equity and inclusion. In 2020, CDA spent $197 million with certified diverse firms — 33% of our total spend and a $62 million increase over 2019 — all in the midst of a pandemic.”
The same is true for airport concessions, with more businesses qualifying as “ACDBE” — Airport Concession Disadvantaged Business Enterprise. O’Hare is on pace for a record 40% participation rate in 2020. Midway is closing in on 57%.
As for the long-stalled extension of the O’Hare people mover project, Rhee said only “it’s gonna open when it’s safe. It’s gonna open when it’s reliable.” She said “substantial progress” has been made during exhaustive testing.
“If you’ve been out to O’Hare, you’ve seen that train running. The construction is done. We’re commissioning it now, and we’re working out all of” the kinks, she said.