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WSJ 10/5: "Tax the Airlines"

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HalinTexas

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Airlines Balk at Tax Proposal
Deficit-Reduction Plan Would Add New Departure and Security Fees for Carriers
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By SUSAN CAREY

Airlines are expressing alarm over an Obama administration proposal to help cut the federal deficit by imposing a new tax on aviation and raising another.

Carriers, airline labor unions, private pilots, corporate-jet builders and other groups are lobbying hard to make the case to Congress that their industry is being unfairly singled out.

"The airline industry is an easy target," said Richard Anderson, chief executive of Delta Air Lines Inc. "Perhaps there's a sense in Washington that wealthy people fly. But over the past 20 to 30 years, flying in the U.S. has been a very middle-class activity."

The administration says fees assessed on travelers cover less than half the costs of beefed-up security at airports. Officials also say that small private jets need to shoulder more of the burden of the air-traffic-control system.

The industry will pay $17 billion in fees and taxes this year, compared with $3.7 billion in 1993, said Mr. Anderson. An average $300 domestic ticket now includes more than $60 paid for by the passenger but distributed to 17 federal taxes and fees, leaving the airlines with just $240 of that purchase, not including fees for checked luggage, ticket changes and the like.

A committee of lawmakers, the so-called super committee, is working with President Obama's proposal to try to find ways this fall to trim the deficit by $1.5 trillion over 10 years.

In its September proposal, the administration said a large commercial jet "would pay between $1,300 to $2,000 in taxes for a flight from Los Angeles to San Francisco while a corporate jet flying the same route and using the same Federal Aviation Administration air traffic services would pay about $60 in taxes."

So the administration proposed a $100 tax on each flight departure, including corporate jets and general-aviation aircraft that require federal air-traffic-control services, in a bid to more evenly spread out those costs. The fee is expected to raise $11 billion over a decade to support the Federal Aviation Administration's airport and airways trust fund. The commercial carriers say it would be hard to pass this cost along to their passengers.

The proposal includes a doubling of the federal security surcharge of $2.50 per one-way trip to $5. Annual increases would triple the fee to $7.50 by 2017.

About $10 billion of the new revenue over 10 years would go toward the Transportation Security Administration to cover security costs, and $15 billion would go to debt reduction.

Gary Kelly, CEO of Southwest Airlines, estimates the departure tax would cost his company $140 million a year. "We are already struggling with huge (fuel) cost increases and challenges to our profitability," he said. Southwest earned $459 million last year on $12.1 billion of revenue.

US Airways Group Inc. estimates the departure tax could cost it $110 million a year. AMR Corp.'s American Airlines pegs its expense at $124 million.

Delta's Mr. Anderson said if his company couldn't pass on that expense, it would have to shrink. He and others in the industry think smaller communities would be the hardest hit.

"Passengers and small communities will be paying one way or the other: through higher fares or no service," said Roger Cohen, president of the Regional Airline Association. "Why is aviation always an ATM?" he asked. "We're visible, vulnerable and measurable."
 
Only if you file. Just scud run, what could go wrong?
 
It will cost a heckuva lot more in lost jobs and flights to small cities than it will generate.
 
"Delta's Mr. Anderson said if his company couldn't pass on that expense, it would have to shrink. He and others in the industry think smaller communities would be the hardest hit."

As discussed in another thread.

$25 baggage fees = passengers won't mind - boon to the industry
$5 increase in departure taxes = end of the world.
 
Camels' nose in tent $100 for turbine today, $250 for everybody sooner or later.


You didn't put enough emphasis. Let me help...


"Camels' nose in the tent..."
 
Isn't it interesting how Big Government's easy answer is to increase taxes without even attempting to cut waste and costs. I'm sure that there are no efficiencies to be gained with all the blue shirts diligently standing around the concourse. I had 3 of them the other day stand outside on the ramp and just watch our aircraft for 30 minutes while it was being turned. I sure felt secure!
 
"Delta's Mr. Anderson said if his company couldn't pass on that expense, it would have to shrink. He and others in the industry think smaller communities would be the hardest hit."

As discussed in another thread.

$25 baggage fees = passengers won't mind - boon to the industry
$5 increase in departure taxes = end of the world.

So an industry (minus SWA) trying to find a way to maintain profits through fees and the like = bad in your world

Govt taxing the profits out of an industry = good???????

Yes, SWA has a way of running their business without fees for luggage, but what you fail to realize, is that the biz customers, loyal customers with any semblance of frequent flier points doesn't pay those fees. Those fees are for the once every three years flyer who shops on expedia for the $5 cheaper fare.
After all, SWA claims to have earned business by everybody else charging fees, you should be happy!!!!
Nobody will win if the govt taxes the takeoffs, even SWA will pay a price.
 
So an industry (minus SWA) trying to find a way to maintain profits through fees and the like = bad in your world

Govt taxing the profits out of an industry = good???????

Yes, SWA has a way of running their business without fees for luggage, but what you fail to realize, is that the biz customers, loyal customers with any semblance of frequent flier points doesn't pay those fees. Those fees are for the once every three years flyer who shops on expedia for the $5 cheaper fare.
After all, SWA claims to have earned business by everybody else charging fees, you should be happy!!!!
Nobody will win if the govt taxes the takeoffs, even SWA will pay a price.

While I agree with the premise of your first point I must disagree with the bolded bit. I fly 46 times a year on the majors (AA, Delta, UAL, SWA) and I don't qualify for free bags on any except the one that doesn't charge. I have FF with all.

None of my tickets are bought on expedia, and they are almost all bought the night before. Many are first class too. (Those get free checked bags)
 
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Is there any thread that you won't jump on and somehow twist it into an anti-SWA rage?

What rage? SWAPA pilot complains that the airlines are charging bag fees and complaining about taxes..... If someone disagrees with a SWAPA pilots complaint, that equals rage? SWA makes money without bag fees, got it. In fact they claim they make more because of bag fees, so they should be happy???? no?
 
Is there any thread that you won't jump on and somehow twist it into an anti-SWA rage?

What rage? SWAPA pilot complains that the airlines are charging bag fees and complaining about taxes..... If someone disagrees with a SWAPA pilots complaint, that equals rage? SWA makes money without bag fees, got it. In fact they claim they make more because of bag fees, so they should be happy???? no?

He isn't a SWA pilot but then you knew that. My first post above stands except that I will add that you will justify your anti-SWA rages by pointing to the most convenient post and screaming......"But I was just replying to the SWAPA pilot who said"........

Typical of the "I am a Victim Mentality"......

Several hundred of your clones are sleeping in a Park down on Wall Street.....
 
The $100.00 fee is for turbine equipment only.

You're gonna need to source that claim, as NOTHING in the actual proposal mentioned turbine equipment.

What it did exclude was "recreational piston aircraft", with no definition as to what is or is not "recreational". If the Obama Administration wanted to exclude all piston aircraft operations, they wouldn't have put a "recreational" qualifier on it.

As written, this $100 per segment tax will cost my company over $40k per year in additional taxes, between our jet and our Cirrus (which is a business aircraft that flies IFR). And I can damn sure bet we'll see exactly ZERO benefit from those additional fees.
 
As written, this $100 per segment tax will cost my company over $40k per year in additional taxes, between our jet and our Cirrus (which is a business aircraft that flies IFR). And I can damn sure bet we'll see exactly ZERO benefit from those additional fees.

... and let's not forget the price of avgas that has more than tripled over a 10 year period.
 
So how's that Hope & Change thingy working out for you? :laugh:
 
So how's that Hope & Change thingy working out for you? :laugh:

Saw a great bumper sticker at a Horse show this weekend. A hot looking gal with a new truck had a picture of Obama with the caption "Does this Ass make my truck look big?".......love it.....
 

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