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Are Passenger trains in N. America ever profitable
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<p>The airlines pay a variety of fees for the airport facilities that they use. They pay landing fees, gate fees, fuel taxes, excise taxes, inventory taxes and property taxes. If they have maintenance facilities on the field, they usually lease them, which means that they pay rents for them. These are variable costs, for the most part, that are charged to current period operating expenses. </p> <p>The airlines usually own the rights to their gates under a long term lease. Sometimes they can sublease them. The price of the gates is usually settled through a robust bidding process, i.e. witness the recent scramble for gates at Laguardia, Ronald Reagan, and Dallas Love Field. </p> <p>The airlines don't pay any of the aforementioned fees and/or taxes. They are paid by the airline's passengers through a variety revenue collection mechanisms.</p> <p>Whether airline passengers pay their fair share of the airport facilities, as well as the air traffic control facilities, that they use, is debatable. As noted the nation's airlines serve a very small percentage of the nation's airports and account for only 1/3 of air traffic control operations. So they don't consume anything like the total spend on the nation's airports and air traffic control systems.</p> <p>Most airports in the United States are owned and operated by a government authority. They are expected to cover all of their costs from airport generated revenue sources. It is not just the landing or other fees mentioned above. Because they have been very successful, they generate revenues from all sorts of vendors, i.e. car parking, retail vendors, rental car agencies, taxi stands, etc.</p> <p>The amount of the airport improvement funds that flow through to major airports, i.e. DFW, Love Field, etc. is unknown. However, not all of it goes to airports with commercial airline service.</p> <p>In 2012 DFW received a small amount of airport improvement money to upgrade its air traffic navigation aids. If I remember correctly the amount was less than 1/2 of one per cent of the airport's budget. But the government could get the money back. How? Better navigation aids mean fewer delays, resulting in less fuel burn and lower expenses for the carriers, which could translate into higher net income and ultimately into higher corporate income taxes paid to the federal government. At least for those airlines that have not been in bankruptcy and therefore don't have a lot of tax loss carry backs and carry forwards!</p> <p>The biggest advantage accruing to the nation's airline passengers lies in the tax free funding for most airports in the U.S. They were funded with municipal debt. The spread between the effective interest rates for the municipal bonds and the corresponding fully taxable bonds would be extremely difficult to determine, i.e. one would have to know the issue dates, yield to maturity, alternatives, etc. However, the spreads are not as wide as many people assume, but the savings was and/or is significant. Because the facilities were constructed with tax free financing, the construction costs were lower, and these lower costs could be passed on to a variety of users. </p>
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