Accounting and Reporting of Passenger Facility Charges

Department of Transportation, Bureau of Transportation Statistics, Office of Airline Information
Number 189
Issue Date: 7/21/95
Effective Date:  Immediately
Part:  241 and 298
Section:  241.24 and 298.62
Paragraph:  241.24 Schedule P-2

On May 22, 1991, the Federal Aviation Administration (FAA) adopted new regulations that establish a passenger facility charge program. These regulations are contained in 14 CFR Part 158, Passenger Facility Charges. Specifically, the regulations establish procedures as to how a Public agency may be authorized to impose an airport passenger facility charge (PFC) of $1, $2, or $3 per enplaned passenger at a commercial service airport it controls. The proceeds from the PFC are to be used to finance eligible airport-related projects that enhance safety, capacity, or security of the national air transportation system, reduce noise from an airport that is part of such system, or furnish opportunities for enhanced competition between or among air carriers.

Section 158.49 contains accounting and disclosure, guidelines for air carriers that collect PFC charges. This section reads:

§158.49 Handling of PFC'S--

a) Collecting carriers shall establish and maintain a financial management system, to account for PFCs in accordance with the Department of Transportation´s Uniform System of Accounts and Reports (14 CFR Part 241). For carriers not subject to 14 CFR Part 241, such carriers shall establish and maintain an accounts payable system to handle PFC revenue with subaccounts for each public agency to which such carrier remits PFC revenue.

b) PFC revenue must be accounted for separately by collecting carriers, but the revenue may be commingled with the carrier's other sources of revenue. The PFC revenue is to be regarded as trust funds held by collecting carriers as agents, for the beneficial interest of the public agencies imposing PFCs. All PFC revenue collected and held by the carriers are property in which the carriers hold only a possessory interest and not an equitable interest.

c) Each collecting carrier shall be required to disclose the existence and amount of funds regarded as trust funds in financial statements.

The purpose of this directive is to provide accounting and reporting guidance on the handling of collected PFCs.

Accounting for Passenger Faclilty Charges

1. Large Certificated Air Carriers. Each large certificated air carrier shall establish within its Form 41 balance sheet Account 2190, "Other Current Liabilities," a separate subaccount for each public Agency on whose behalf a passenger facility charge is collected.
2. Small Certificated Air Carriers and Commuter Air Carriers. Each small certificated air carrier and commuter air carrier shall establish in its accounting system a separate liability subaccount for each affected public agency for the purpose of crediting the amount of PFC funds collected.

Disclosure of Amount of Passenger Facility Charges Held in Trust

1. Large Certificated Air Carriers.

(a) Large Certificated Air Carriers that are required to File Form 41 Schedule P-2, "Notes to RSPA Form 41 Report," shall disclose on Schedule P-2: (1) the total PFC amount recorded in Account 2190 at the beginning of the quarterly period covered by the report, (2) the total amount of PFCs collected in trust on behalf of public agencies, (3) the total amount of PFCs held in trust that were remitted to public agencies levying such charges, (4) the total amount of ALL adjustments during the reporting period made to Account 2190 that effected the carrier's PFC liability, including, but not limited to the amount that represent the carrier's collection compensation and any PFC collections that were refunded to passengers, and (5) the total amount of PFCs held in trust in Account 2190 at the end of the quarter. Reported amounts shall represent the total PFC collection, remittance, and adjustment activity during the reporting period covered by the quarterly Schedule B-1. "Balance Sheet." The reportable PFC amounts shall be included in the following caption, which shall be typed on Schedule P-2.

Passenger Facility Charge Activity for the Quarterly Period Ended XX/XX/95.

PFC Amount in Account 2190 at Beginning of Quarter $__________
Total Amount Collected in Trust for Public Agencies $__________
Total Amount Remitted to Public Agencies $__________
Adjustments (Collection compensation, PFC refunds) $__________
PFC Amount in Account 2190 at End of Quarter, $__________

(b) Large Certificated Air Carriers that are Not Required to File Form 41 Form 41 Schedule P-2, "Notes to RSPA Form 41 Report", shall disclose at the bottom of Schedule B-1.1: (1) the total PFC amount recordedin Account 2190 at the beginning of the reporting period covered by the report, (2) the total amount of PFCs collected in trust on behalf of public agencies, (3) the total amount of PFCs held in trust that were remitted on public agencies levying such charges, (4) the total amount of ALL adjustments during the reporting period made to Account 2190 that affected the carriers's PFC liability, including, but not limited to, the amount that represent the carrier's collection compensation and any PFC collections that were refunded to passengers, and (5) the total amount of PFCs held in trust in Account 2190 at the end of the reporting period. Reported amounts shall represent the total PFC collection, remittance, and adjustment activity during the reporting period covered by the semi-annual Schedule B-1.1, "Balance Sheet." The reportable PFC amounts shall be included in the following caption, which shall be typed at the bottom of Form 41 Schedule B-1.1. Note: For those carriers using the DOT-provided software package to file its Form 41 Schedule B-1.1, the information below should be included in the cover letter accompanying the Form 41 software submission.

Passenger Facility Charge Activity for the Semi-Annual Period Ended XX/XX/95.

PFC Amount in Account 2190 at Beginning of Period $__________
Total Amount Collected in Trust for Public Agencies $__________
Total Amount Remitted to Public Agencies $__________
Adjustments (Collection compensation PFC refunds) $__________
PFC Amount in Account 2190 at End of Period $__________

2. Small Certificated Air Carriers and Commuter Air Carriers shall disclose, on Form 298-C Schedule F-1, "Report of Financial Data," (1) the total amount of PFCs held in trust at the beginning of the quarterly period covered by the report, (2) the total amount of PFCs collected in trust on behalf of public agencies, (3) the total amount of PFCs held in trust that were remitted to public agencies levying such charges, (4) the total amount of all adjustments during,the reporting period made to the carrier's PFC liability, including, but not limited to, the amount of monies that represent the carrier's collection compensation and any PFC monies refunded to passengers, and (5) the total PFC amount held in trust at the end of the quarterly period covered by the report. Reported amounts shall represent the total PFC collection, remittance, and adjustment activity during the reporting period covered by the quarterly Schedule F-1. The reported PFC activity shall be included in the following caption, which shall be typed at the bottom of Schedule F-1.

Passenger Facility Charge Activity for the Quarterly Period Ended XX/XX/95.

Total PFC Liability at Beginning of Period $__________
Total Amount Collected in Trust for Public Agencies $__________
Total Amount Remitted to Public Agencies $__________
Adjustments (Collection compensation, PFC refunds) $__________
Total PFC Liability at End of Period $__________

Special Reports, Auditing, and Record Retention

§158.71 Federal Oversight--

b) The Administrator may periodically audit/or review the collection and remittance by the collecting carriers of PFC revenue. The purpose of the audit or review is to ensure the collecting carriers are in compliance with the requirements of this part and PFC statute, 49 U.S.C. 40117.

c) Public agencies and carriers shall allow any authorized representative of the Administrator, the Secretary of Transportation, or the Comptroller General of the U.S., access to any of its books, documents, papers, and records pertinent to PFC's.

These two paragraphs of §158.71 establish the right of the FAA Administrator to periodically review or audit the collection and remittance of PFCs by the air carriers. The FAA is charged with administering the PFC program and the accounting and reporting guidance provided in this directive are designed to enable the FAA to monitor the collections and remittances of PFCs by the air carriers. Should the situation arise where the FAA needs to review an individual air carrier's handling of PFCs, the FAA has developed a special report that would be submitted by the affected air carrier. For the benefit of the air carriers that are collecting PFCs on behalf of a public agency, an illustration of this special report is attached to this directive. Due to the limited audit resources available, it is anticipated that these special reports and the disclosure of PFCs in the financial statements will resolve most, if not all, of any concerns about the collection and remittance of PFCs by individual air carriers. The FAA Administrator does reserve the right to request an audit in those situations where the issues raised cannot be resolved by the filing of the special report.

As a reminder, 14 CFR Part 249 Preservation of Air Carrier Records, requires in . 249.20 that certificated air carriers preserve for three years all papers, records, or other evidence supporting financial and statistical reports filed with the Department. Therefore, should a need arise to require the filing of the special report or to perform an audit of PFC collections and remittances, the Department expects that at a minimum, all documents that support the calculation of PFC collections add remittances will be available for inspection for a period of at least three years after creation.

If you have any questions about accounting and/or reporting PFC information on Form 41 or Form 298-C, please contact Clay Moritz of this office at (202) 366- 4385. If you have a question about the special report attached to this directive or about the PFC program, please contact Donna Taylor of the Federal Aviation Administration at (202) 267-3845.

This action is taken under authority delegated in section 385.27(b) and (e) of the Department's Regulations (14 CFR Section 385.27(b) and (e)).

Timothy E. Carmody
Acting Director
Office of Airline Information

Attachment

Passenger Facility Charges Report for the Month of