11-09-2011
11:51 AM
10 Loves
A couple of points:
1. To use the term "taxes" is misleading. These are user charges (or fees) that pay for airports, air traffic control, and security screening.
2. Nowhere in the White House plan ("Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction, September 2011) does it state that these two particular fees would be used for deficit reduction. The report clearly states that the $100 departure fee would be placed in the Airport and Airway Trust Fund, which by law can only be used for aviation purposes. Also, the airline industry conveniently omits that the plan calls for an immediate $2 billion in airport investment and $1 billion in air traffic control investments.
3. When a new excise fee is introduced (as in the proposed departure tax) or an existing one is increased (as in the security fee), consumers (i.e. passengers) and suppliers (i.e. airlines) share the economic burden of the tax. How the burden is shared depends on a number of factors, including how price sensitive consumers and suppliers are and the nature of the competition. This is basic microeconomics, but not well understood by either policy makers or the general public.
4. The White House plan calls for the new $5 security fee to be collected "per one-way trip", instead of the current system, in which $2.50 is collected "per enplanement". Consequently, passengers with connections (and that's a lot of passengers) would pay no more than today.
5. The TSA's $2.50 security fee was introduced February 1, 2002 and has not been inflation adjusted a single time since then. The FAA's segment fee, on the other hand, is inflation adjusted every year and the maximum Passenger Facility Charge collected by airports was increased by 50% on April 1, 2001. One can safely argue that tripling the fee is excessive, but there is definitely a valid argument for some sort of increase.
6. When the FAA ran out of its authority to collect taxes earlier this year, pretty much every airline, including Southwest, increased its base fares to keep the expired taxes as added revenue. This undermined a lot of the goodwill the airlines otherwise may have enjoyed in its fight against user fee increases.
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