Posted on: 05 March 2014 by Mark Howells
Airlines for America (A4A) has opposed the FY2015 White House budget proposal, which calls for an additional $4.2 billion in new and higher taxes on airlines and their customers.
A4A calls the proposal “an unprecedented cash grab that will hurt jobs, service to small communities and the economy” and is urging Members of Congress to reject the proposal, and recognise “that commercial aviation is a key enabler of job growth and US economic activity that could contribute at an even greater level, if not impeded by excessive taxes and regulations”.
The Association pointed out that for a typical $300 roundtrip domestic ticket, customers today pay $61 in federal taxes, or 20% of the ticket price. That number will go up in July when the Transportation Security Administration fee more than doubles, costing passengers an additional $1 billion. A4A calculates that if the Administration’s proposed budget is approved, taxes on that $300 ticket will increase to 26% or $77. The tax burden on aviation and its customers has more than tripled since 1998 to more than $19 billion annually.
“Enough is enough: the White House needs to understand it can no longer use airlines and their passengers as its own personal ATM without consequences,” declared A4A president and CEO Nicholas Calio. “It’s like playing a game of whack-a-mole on Groundhog Day because the same ill-conceived proposals keep popping up no matter how many times Congress and airline passengers and shippers knock them down. Coming on the heels of a 125% increase in the TSA tax on passengers to offset the deficit, this proposal is particularly egregious.”
The FY2015 budget proposes to: increase the TSA tax from $5.60 per one-way trip (in July) to $6, costing passengers more than $217 million per year; raise the passenger facilities charge (PFC) from $4.50 per flight segment to $8, costing passengers and airlines an additional $2.2 billion annually; reinstate the Aviation Security Infrastructure Fee, which Congress eliminated in 2013, costing $420 million; increase the Department of Homeland Security (DHS) customs fee from $5.50 to $7.50 and immigration fees from $7 to $9, costing $318 million annually; and add an 18th unique tax on aviation – new mandatory $100 per flight departure tax – costing $1 billion annually.
Calio stated that increasing the PFC cap is unwarranted, as airport revenues reached a near-record level of $23.9 billion in 2013, including $2.8 billion in revenue from PFCs, just below the all-time high. “Raising the PFC will drive up the cost of flying for millions of Americans who rely on air travel, cost jobs, limit service options to small and medium communities and ultimately harm the US economy,” he said. “Passengers, airlines and the US economy simply cannot afford higher taxes on air travel and we urge Congress to hold the line by rejecting the unnecessary PFC hike and other tax increases.”