U.S. airline losses would increase to $6.5 billion this year from $5 billion if President Bush succeeds in raising airline-security taxes...
U.S. airline losses would increase to $6.5 billion this year from $5 billion if President Bush succeeds in raising airline-security taxes, the head of the Air Transport Association said yesterday.
Losses would widen because competition prevents airlines from passing on the $1.5 billion cost of the government fees to customers, said James May, president of the Washington trade group that represents major U.S. airlines. Carriers lost $10 billion last year, the group said.
“There is truly a consensus that the tax burden is killing this industry,” May said at a news conference in Washington that also involved other airline, travel and tax-reform groups.
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American, United and other carriers have lost $33 billion in the past three years on higher fuel costs and excess market capacity that bars them from raising fares. Fares in past months have been at 1988 levels, according to the transport group. United and US Airways are operating under bankruptcy protection.
The Bush administration budget, released Monday, proposes higher fees to fund airport-screening operations of the Homeland Security Department. The price of a one-flight, one-way ticket would climb to $5.50 from $2.50 per flight, with a maximum of $16 for a round-trip, up from $10.
Airlines have been forced to lobby against security-fee increases, with success, every year since the current tax was enacted two months after the Sept. 11, 2001, terrorist attacks. The carriers say security fees should be borne by the general taxpayers, not travelers and airlines.
“It’s totally irrational to have separate treatment for the airline industry only,” said Duane Woerth, president of the Air Line Pilots Association, the biggest pilots union. He compared the administration’s plan to taxing only Hawaiians to pay for U.S. defenses after Japan’s 1941 attack on Pearl Harbor.
The airlines’ trade group will be more aggressive than in the past in lobbying against higher taxes, America West Chief Executive Doug Parker told reporters yesterday at the company’s headquarters in Phoenix.
“It’s outrageous that’s [increased airline-security taxes] a part of the new budget,” Parker said. “It clearly indicates we, as an industry, have not communicated our message or, if we have, no one cares.”
May said the U.S. hasn’t yet made a case that it needs the additional revenue for screening. Airlines may have as many as 19,000 jobs “at risk,” he said, in addition to 123,000 workers who have lost jobs in the past three years.
Airlines last year paid the government about $1.6 billion under the tax and $315 million under a separate security fee, according to the trade group.
Acting Homeland Security Secretary James Loy said Monday that department studies concluded passengers would pay up to $10 per flight if they felt they were safer.