Higher airline fees are tax hikes in disguise

As House and Senate members of the Budget Conference Committee begin negotiating a deal to address the government’s fiscal challenges, they are looking at options other than new taxes to raise revenue, but the approach some advocate is misleading.

Included in both the House Republican and the White House budget proposals are recommendations to double or triple the tax passengers pay to the Transportation Security Administration (TSA) every time they fly. Make no mistake: while described as a user fee, this is a tax, and it is a misguided revenue grab with unintended consequences that will be far more damaging than beneficial to our nascent economic recovery and jobs.

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The airline industry and its passengers are already overtaxed. Since 1990, the number of special federal aviation taxes and fees has risen from 6 to 17 and the total amount paid has grown from $3.7 billion to $19 billion a year. In the last four decades, the taxes paid on a typical $300 domestic round-trip ticket has nearly tripled from $22 to $61. Air travel is taxed at a higher rate than the federal rate for alcohol and tobacco, which are considered “sins” and taxed to discourage their use.

Air travel is not a sin. It is an economic engine that supports 10 million jobs and $1 trillion in economic activity annually. Nonetheless, lawmakers perennially are tempted to use airlines as a convenient ATM, or collection agency, when they need more money. Two years ago, aviation advocates and their allies faced the prospect of a doubling of the TSA passenger security “fee” – which would have come with no commensurate increase in security coverage – as well as a ludicrous 18th special aviation tax – a $100 departure tax. These proposals didn’t make sense then and they don’t make sense now.

Higher taxes make airfare more expensive and dampen demand. According to a report by the nonpartisan Government Accountability Office (GAO), every dollar increase in the price of a ticket reduces the demand for travel by as much as 2 percent.

Rather than increasing taxes on our passengers, we can reduce the TSA’s costs by further implementing proven, risk-based screening programs like PreCheck for passengers and the Known Crewmember program for pilots and flight attendants.

TSA collected $2.3 billion in security taxes from airlines and their customers last year, a 100 percent increase since its inception in 2002. Doubling the TSA security tax would cost passengers more than $730 million annually. That’s a huge additional tax on the traveling public, with no direct benefit to those who pay it.

To add insult to injury, TSA is proposing to shift responsibility for monitoring passenger exit lanes at 348 airports – and more than $100 million in associated annual costs – to airport and airline operators.  But airlines already pay TSA to secure exit lanes as part of the Aviation Security Infrastructure Fee. TSA collects about $400 million annually from airlines alone, based in part on the cost of exit lane monitoring.

Even though the TSA provides security for many modes of transportation including buses, trains and mass transit, only airline passengers are charged for the agency’s assistance. What’s more, Congress has already increased TSA’s budget even as passenger traffic was decreasing. From 2007 to 2012, TSA’s budget increased 18 percent and workforce ballooned 13 percent, yet the number of customers screened decreased by 11 percent or 75 million people.

Adding additional taxes on air travel leads to higher ticket prices, decreased travel demand and air service, a slowdown in economic growth and ultimately the loss of jobs. The bottom line is that there is no compelling argument for raising taxes on aviation. A budget deal should not be reached on the backs of airlines and airline customers who are already paying much more than their fair share.

Calio is president and chief executive officer of Airlines for America.