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Airlines Blast Proposed PFC Tax on Travel

May 14, 2010 By: George Dooley

Both consumers and the travel and tourism industry will be harmed by a proposed increase in passenger facilitation charges (PFCs) that would raise travel costs by as much as $112 for a family of four, the Air Transport Association (ATA) said in a letter to members of the Senate and House of Representatives. The two chambers are trying to resolve differences between the House and Senate versions of the Federal Aviation Administration (FAA) reauthorization bill. The House-passed bill includes an increase in PFCs from $4.50 to $7 per segment, and also expands the eligibility criteria for PFC projects.

“This increase would be harmful and is unnecessary,” ATA said in its letter. “Based on estimates from the Government Accountability Office (GAO), a PFC increase from $4.50 to $7 maximum could mean $2 billion more in taxes per year. The House-proposed increase represents a 55 percent increase over today’s levels, and would result in an additional $112 in taxes being imposed on travel by a family of four. As you know, the Senate bill does not include any mandatory PFC tax increase.”

The ATA protest was addressed to John Rockefeller (D-WV), chairman of the Senate Committee on Commerce and other key Congressional players.

“Commercial airlines in the United States today generate over $1.1 trillion in economic activity, and the industry is responsible for 10.2 million U.S. jobs,” the ATA said. “We are proud of our contribution to the nation’s economy; however, a PFC tax increase would threaten that contribution, and for no justifiable reason.

“Airports collected $23 billion in revenues in 2008, and the FAA estimates that PFC collections (based on the current $4.50/segment fee) will produce a record $2.8 billion this year,” the ATA continued. “Airports also have filed financial reports with the FAA indicating that they have available up to $21 billion of unrestricted financial assets. The recently passed Economic Stimulus legislation provided an additional $1.1 billion in airport improvement projects, $1 billion in airport security equipage and additional relief through Alternative Minimum Tax liability reduction. Airports certainly cannot make the case that they are struggling financially.

“In contrast, airline revenues declined by $31 billion in 2009, and travel levels have been declining – in part as a result of the struggling national economy,” the ATA said. “To help stem these losses, airlines have reduced capacity and employment. One in every three airline jobs has been lost since 2001, with almost 40,000 layoffs just since 2008. Especially as difficult economic conditions persist, the airline industry and passengers cannot afford higher taxes that inhibit growth and add additional costs for consumers.

“Rather than impose an unnecessary tax that will do nothing to reduce delays and congestion in our nation’s airspace, we urge you to continue your efforts to replace our outdated, inefficient air traffic control system,” the ATA argued. “These improvements will reduce inefficiencies in air travel without imposing unnecessary and unjustified tax increases.”


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