Transport Airlines

The U.S. Government Is Using Airline Security Fees to Fill Budget Gaps

@denschaal

Dec 13, 2013 10:00 am

Skift Take

The attitude in Congress seems to be: Hey, lets solve the budget impasses by taxing travelers some more. After all, they aren’t organized, and we can sneak these new taxes through. But if air travel is a stimulator of the economy, then Congress may be shooting itself in the foot.

— Dennis Schaal

Evolving Strategies in Travel Ad Tech and Bookings

Mark Makela  / Reuters

Employees check in travelers at the US Airways counters at Philadelphia International Airport. Mark Makela / Reuters


After a couple of years of Congressional partisan impotence, sequestration, and a federal government shutdown, U.S. airline passengers have done the seemingly impossible: They played a major role in breaking through the gridlock in Washington and getting a compromise budget deal passed.

The only hitches, though, are that airline passengers accomplished this herculean feat unwittingly, and they’ll end up paying for it.

A lot.

Pundits are hailing the Bipartisan Budget Act of 2013, forged by Republican Paul Ryan and Senator Patty Murray, a Democrat and bridge builder respected on both sides of the Congressional aisle. The budget passed the Republican-controlled House on December 12, and now moves on to the Senate.

With the budget deal, unless there are changes, lawmakers promise the harsh sequestration cuts of 2013, which saw FAA furloughs and some air traffic control towers closed, won’t be repeated next year, or in 2015, either.

A cornerstone of the budget compromise is that it increases that aviation passenger security fee to $5.60, up from $2.50, for a one-way flights, and $11.20 per roundtrip.

Although fares themselves won’t rise, the fees will more than double.

Airline passengers are doing some heavy-lifting for this budget deal. And, although it may fund some infrastructure improvements, it surely won’t spur demand for air travel, and could adversely impact the economy by inhibiting corporate productivity.

The National Journal charted how the fees and spending cuts contained in the budget deal would provide “sequestration relief” over the next decade, and you can immediately see the out-sized role that the increased aviation security fees would play, accounting for $12.6 billion in revenue over the next 10 years.

Screen Shot 2013-12-12 at 10.27.49 PM

The lion’s share of the estimated savings over the next decade, $21.5 billion, come from things such as capping the salaries of government contractors, ensuring prisoners don’t collect unemployment checks, and curbing the risks of Social Security fraud.

But the next highest savings category, worth $12.6 billion over the next decade, is generated by the increased aviation security fee, according to the National Journal analysis.

“It’s the cumulative impact of travel taxes that hit business travel and U.S. businesses, which grow by sending their employees on the road,” states the Global Business Travel Association. “The aviation security tax in the current budget deal means over a billion dollars more in taxes every year, combined with increasing rental car, hotel and restaurant taxes.”

The GBTA opposes the hike in the aviation security fee as an unfair burden on business travelers.

But the increased aviation security fee isn’t even the end of potential new taxes on travelers.

The Obama administration’s fiscal year 2014 budget, with support from the nation’s airports, proposes increasing the passenger facility charge to $8 per segment, up from the current $4.50.

In calendar year 2012, even at the $4.50 per segment level, passengers paid more than $2.8 billion in passenger facility charges.

With all of these new taxes, airline passengers are accomplishing the near-impossible. They are giving a gigantic boost to getting the legislative system working again, and they are heading off new threats of sequestration, at least in theory.

Which begs the question: Why are travelers such easy targets?

Tags: , , ,

Follow @denschaal

Next Up

More on Skift

Best Travel Ads This Week: A Course in Creativity
How Pharrell’s ‘Happy’ Is Spawning Amazing Travel Videos From Around the Globe
How Tech Changes Everything: Sabre Employees Live Tweeting Their IPO With Its Own Hashtag
How to Find the ‘Holistic Traveler’ Trapped in Your Data

We're the Moneyball of the Travel Industry

We know what's coming next in travel. Subscribe to the newsletter and get all the goodness in your inbox daily.