This is a letter that was sent to all members of the Senate Commerce Committee and the House Transportation and Infrastructure Committee regarding calls to increase fees on airline passengers. Let Congress clearly hear, “We don’t want any increases in airport, agriculture inspection or customs and immigration fees.”
TO: Members of the Senate Commerce Committee and
House Transportation and Infrastructure Committee
Government taxes and fees charged airline passengers are extraordinary
No increases in taxes and fees should be included in the FAA Reauthorization Bill
Localities enjoying the benefits of airports should pay their fair share
Almost everyone involved with the upcoming FAA reauthorization bill, airports, chambers of commerce, immigration and customs and the agriculture department are asking to increase taxes and fees to be collected from passengers.
Consumers are not among those groups. We do not want increases in any fees associated with airlines, airports, customs, agriculture or security. We are paying more than enough.
Taxes on passengers are extraordinary
Currently, consumers pay more taxes for the pleasure of flying than for almost any other activity in the country. Every passenger on a one-stop, round-trip flight has to fork over $11.20 for the TSA Security Fee. Passengers then pay $4.50 for each boarding — adding up to $18 for a connecting round-trip flight. In addition, a US Federal Segment Fee adds $4 to every take-off on a domestic flight — $16 for a connecting round-trip flight.
Today, passengers are paying $45.20 before they even pay the 7.5 percent transportation excise tax that is included in the airfare.
For a family of four spending $200 apiece on airfare, that means an excise tax of $60 + $45.20 — a total of $105.20 in taxes. By the time the taxes are figured into the cost of travel, the effective tax rate is 21 percent on average.
Worse, according to Uncle Sam, passengers aren’t paying enough. The President, in his budget, and other businesses that work with airports, think passengers should pay even more!
As to the passenger facility charge and others — the current rate is $4.50 per boarding — the airports and the administration are asking that this fee be increased to $8 per boarding or more.
Should this happen, passengers will be paying $32 in passenger facility charges for every one-stop round-trip. That, added to the security fee, adds up to $43.20. And, don’t forget the $16 in segment fees. Then when the excise taxes are figured into a $200 airfare, the total tax ends up being $59.20 for an individual and $232.80 for a family of four. All this is before even a penny in airfare is added.
Travelers United has heard advocates for the tax increase say, “It’s only a small increase in tax.” However, that assumes flights are all one way. Plus, most travelers like to come home, which means the fee (tax) is doubled. These tax advocates also assume that the flights are non-stop. However, most flights on network carriers stop at one of the major airline hubs. The $3.50 increase is really a $14 increase when one stop and a round trip is involved. If legislators think about a family of four, the increase is $56, a serious chunk of change for the average American family.
Do not rubber-stamp an increase in PFCs or other fees
When mandatory taxes and fees are increased by more than 75 percent in one fell swoop, legislators need to take a second look.
The first reaction is, “Enough is enough!” But, the public citizen in us realizes that airports don’t function without investments and that many economic benefits flow to cities and towns because of a well-functioning aviation network. So, Travelers United took a deeper look at whether the airports really needed this money.
Airports have plenty of access to funding.
For all of the weeping and wailing about the need for more taxes, Travelers United found an airport financial ecosystem flush with cash. Unlike our highway systems where potholes are not filled and bridges crumble, the airport system is state-of-the-art.
• Most of the big terminal construction projects are jointly financed by airports and airlines together.
• Most of the airports have high A-rated bonds that make borrowing money easy; and, at low interest rates.
• Airport infrastructure bank accounts are enormous, with an uncommitted balance of about $11.4 billion of unrestricted cash and investments. (Even if not one tax was collected next year, the nest-egg would support almost every planned airport construction project).
• Other federal programs that support airport construction and safety enhancements are also enjoying plenty of cash. The Airport and Airway Trust Fund has $6 billion in the bank for future airport construction spending.
• The airports just collected more than $24 billion in revenues in 2014.
• The average collection per-passenger has far exceeded the inflation rate over the past 15 years.
At the same time, the income of average Americans has been flat. If consumers’ incomes had increased by 52 percent over the past decade, like the income of airports, travelers wouldn’t be so concerned. However, as the economy has grown, incomes of the general public have been lagging.
Airports benefit the community — localities should pay their fair share. They don’t.
Another consideration is the benefit that an efficient and busy airport brings to a community. Everyone benefits from new airport construction. But, only the passengers are paying.
Though airports are financed with municipal bonds, the bonds are paid for in a large part by using passenger facility charge incomes. The April 2015 GAO study, titled “Information on Funding Sources and Planned Capital Development,” states that airports plan to spend 74 percent of their PFC revenues on debt service.
In other words, even supposed local bonds are paid for using passenger funds. That is simply not fair to the flying public. The localities that are enjoying the economic spillover from successful airports should be forking over their fair share.
Travelers United can understand why Chambers of Commerce and local tourism officials are all supporting the increase the passenger facility charges — it is free money for them to pour into local jobs. But, for passengers taking off and landing at those airports it is an unfair subsidy and an unnecessary one.
Travelers United firmly rejects any need for any increase in airport or other government aviation-related taxes and fees. We are already paying our fair share.
Sincerely,
Charles Leocha
Chairman, Travelers United
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
