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U.S. Travel Industry fights proposed additional air travel tax

  • Published by Ozgur Tore

airlines

Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, and U.S. Travel Association President and CEO Roger Dow issued statements that opposed the FY 2016 White House budget proposal, citing several unnecessary tax increases, most notably a dramatic hike of the passenger airport tax (Passenger Facility Charge (PFC)) from $4.50 to $8.

Under this budget proposal, a family of four taking one round trip could pay up to $128, versus $72 presently – a $56 increase. All told, the White House is proposing an additional $3.8 billion per year in taxes on airlines and their customers, up from the more than $20 billion they pay today.

Currently, travelers pay $63 in federal taxes, or 21 percent of a $300 one-stop, round-trip domestic ticket. If the Administration’s proposed budget were passed, it would increase the federal tax amount to $77, or 26 percent of the ticket price – an incredibly onerous and excessive burden on airline passengers.

A4A noted that U.S. airlines support infrastructure improvements and are committed to enhancing the passenger experience at airports and in the air as evidenced by more than $52 billion spent on airport infrastructure at the country’s 30 largest airports since 2008. This commitment to infrastructure has led to new runways at Chicago O’Hare, Washington Dulles, Seattle, Fort Lauderdale and Charlotte, new international facilities at Atlanta and Los Angeles, and new or renovated terminals in Miami, Las Vegas, Houston and San Francisco among others. From 2000 to 2013, airport revenues per passenger grew 52 percent — far exceeding inflation (the consumer price index rose 35 percent) and the average domestic airfare (which rose 22 percent including ancillary fees) during the same period.

A4A President and CEO Nicholas E. Calio. “We can do better than burdening passengers with a tax that is not needed, and for the sake of our economy and jobs, we must. This is exactly why we have called for a National Airline Policy.”

Roger Dow said, “The U.S. travel community is alarmed and disappointed that anyone would give serious thought to tampering with ‘Open Skies,’ which has both made it easier and cheaper for American citizens to travel abroad and helped expand the lucrative inbound international travel market to the U.S.

No sane person would ever argue that U.S. businesses should not be as healthy and profitable as possible. But we believe any move to abrogate Open Skies would fly in the face of competition and consumer choice, and ultimately harm demand for travel to the U.S. We simply cannot see how that helps any domestic industry or the overall economy.

“Historically, shifts toward protectionism have ended up hurting markets and choking off growth and job creation. Travel to and within the United States has lately been under assault from protectionist, anti-competitive forces, and the move against Open Skies is the latest example. The all-out blitzkrieg to keep out Norwegian Airlines, a low-cost carrier whose entrée to the U.S. market would help bring new economic activity to our shores, is another.

“Inbound travel is the country’s second-largest industry export, and has vastly outperformed the rest of the economy in many key respects during the recovery—especially job creation. But the international travel marketplace is hyper-competitive, and we have only just returned to gaining market share after a number of years of decline. The fact that airfares are declining to literally every country except ours bodes poorly for our ability to keep pace with the rest of the world.

“We implore both the Obama administration and the private sector to reject moves toward protectionism that would harm competition, of which backing away from Open Skies would be an especially damaging one.”

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