Scott Spangler JET WHINE
Fair Taxation Instead of Aviation User Fees
July 15, 2013
  • Share
  • Inadequate revenue from aviation taxes on fuel and tickets, which fund the U.S. aviation infrastructure and the agency that regulates it, is how some in the FAA justify their desire for user fees to make up the difference. Before they go there, why doesn’t government catch up with current airline business practices and include the myriad fees that are not subject to the ticket tax.

    We’re taking some serious money here, an average of $250 million a year from baggage fees alone, according to a Washington Post article, “As airlines raise fees instead of fares, taxpayers pick up the tab.” As the article’s graphic above shows, between 2007 and 2012 the airlines collected $12.8 billion in baggage fees. At the 7.5 percent ticket tax rate, that’s $960 million in lost revenue. During the same period, the airlines charged another $11 billion to change a ticket.

    Simply put, airline fees not subject to the ticket tax is one reason why aviation revenue has not kept pace with its costs. Let’s face it, we’d all like tax-free income, but it is not fair to anyone who pays the fees and uses the system. The DoT took the first step in its fiduciary responsibilities when it required airlines to include all applicable fees when passengers bought a ticket. Making the total subject to the ticket tax seem the logical next step.

    Some might argue this is not fair to the airlines or its passengers. Almost certainly, the airlines would increase fees to cover the tax bite, which wouldn’t make passengers happy. But they are taxpayers, too, so one way or another, they’ll be paying for the system that gets them safely from Point A to B. As the heaviest user of the air traffic control system, comprehensive application of the ticket tax seems to be the easiest and most equitable funding mechanism.

    Beyond the unfairness of user fees, creating and implementing a system to collect them would only increase the aviation’s costs more, given the FAA’s bureaucratic and system inefficiencies, which AIN recently itemized in “FAA Budget: Agency Struggles To Manage Resources.” Congress, the report notes, contributes to the problem, and given its performance over the past two years, resolving that problem is certainly impossible.

    But that doesn’t mean we should not try, because putting pressure on our elected officials to put pressure on the agencies that run the system is the only way we’ll see change for the better. If we surrender the eternal fight, airline passengers won’t be the only ones paying a growing list of ever climbing fees. –Scott Spangler, Editor

    Fair Taxation Instead of Aviation User Fees