The Bush administration has opened its second term with a frontal assault on the major airlines. Its proposal to steeply increase passenger security fees per flight leg has sparked an intensive airline campaign against the increase. But the carriers must make their fight on hostile ground, in a congress that still feels "lender remorse" over its $15 billion 2001 airline aid package.
The White House plan would fund the Department of Homeland Security in the fiscal year starting in October with a fee that goes from $2.50 per segment to $5.50 per segment, with a cap on each one-way trip of $8, up from a $5 cap.
The fee is collected by the airline when the passenger pays for a ticket, and is remitted to the government to support the department's 45,000-strong Transportation Security Administration (TSA) in its airport screening and other security functions. The increase could generate about $4.1 billion in 2006, up from about $2.65 billion.
But the charge is likely to be borne by the carriers, not by flyers, says LECG consultancy director Dan Kaplan, because it is unlikely that the airline industry "will be able to pass much of the proposed increased security taxes of $1.5 billion on to its customers".
Homeland Security officials say that studies indicate public willingness to pay the fee, and note that the charges and a $350 million industry security payment still fall short of covering the cost of screening.
Joining the Air Transport Association (ATA) and Regional Airlines Association in protest were the Air Line Pilots Association, the Transport Trades unit of the AFL-CIO, the nation's major umbrella group for organised labour, travel groups and anti-tax advocates in an alliance against the proposals. Americans for Tax Reform president Grover Norquist, a former adviser to President George Bush, says: "TSA, despite having a needed role in safeguarding our nation's security, is feathering its nest like any other government bureaucracy."
"We believe this $1.5 billion tax proposal will put another 19,000 airline jobs at risk," says James May, ATA president. "Many cities have already seen a decrease in flights as airlines were forced to eliminate service because of higher security taxes and fees," adds Deborah McElroy president of the Regional Airlines Association.
Source: Airline Business
