Obama administration looks to $14 air tax bump to improve infrastructure
Airlines like it best when they’re the only ones hiking fares, and a government jump would mean carriers would have to wait longer before attempting a fare increase among their business travel base.
The cost of flying might be going up, but this time it’s not the airlines raising prices.
The Obama administration has proposed raising the taxes on air travel by about $14 per flight, a move airlines strongly oppose.
Higher taxes are needed to help reduce the deficit, pay for improvements at the nation’s airports and add thousands of new immigration and customs officers to reduce wait times to process foreign visitors, the administration says.
Airlines say higher taxes will backfire and hurt the economy.
“Our fragile economy and the millions of middle-class Americans who rely on air travel and shipping every day simply cannot afford tax increases that will drive up the cost of flying or limit service options to small communities across the country,” said Nicholas E. Calio, president and chief executive of Airlines for America, the trade group for the nation’s airlines.
Congress ignored similar hikes proposed by the Obama administration last year. Since then, the airlines themselves raised fares 3%, from an average of $364 in 2011 to $375 last year, according to the U.S. Bureau of Transportation Statistics.
But airline industry representatives say there is a difference between a fare hike and a tax increase.
Fare increases are used by the airlines to reinvest in services to passengers — such as buying new planes, said Katie Connell, a spokeswoman for Airlines for America.
“A tax or fee imposed by a third party that keeps the money does nothing for our customers,” she said, adding that most airlines earn an average profit of 37 cents per passenger.
But some industry experts say the proposed rise in taxes would only help keep up with inflation.
“It’s an inflationary adjustment,” said George Hobica, founder of the travel website Airfarewatchdog.com. “It’s not going to discourage anyone from flying.”
(c)2013 the Los Angeles Times. Distributed by MCT Information Services.