Obama 2012 Budget Faces Fire From Airline Industry

The new White House budget proposal ran into flack from the airline industry who charged the new budget will increase passenger taxes, cost thousands of jobs and adversely impact fares and service.

Airlines for America (A4A), the industry trade group, said the Obama budget attempts to “offset the deficit on the backs of airline customers by adding even more tax increases, could impact demand for air travel and ultimately cost jobs and service to communities.”

If the White House proposal is implemented, A4A said “customers would be paying more in air taxes, meaning fewer will fly, which in turn will prompt airlines to reduce service, impacting hundreds of thousands of the 10 million good-paying jobs that commercial aviation creates.”

A4A says the White House is proposing over the next five years “to triple the aviation security tax to $7.50 for each one-way trip in 2018, resulting in an $18 billion government windfall to be used for deficit reduction – not on aviation security programs. In addition, the proposal also seeks to add a new $100 per flight tax with a portion of those proceeds also going toward deficit reduction.”

“It makes absolutely no sense at a time when we should be encouraging economic and business development enabled by travel and tourism, that we would discourage flying by trying to balance the budget on the backs of airline customers with yet another tax,” said A4A President and CEO Nicholas E. Calio.

“It is the wrong approach and counter to leveraging commercial aviation – a key enabler of job growth and U.S. economic activity. By holding the line on federal aviation taxes paid by airlines and their customers, the airlines can maintain jobs and provide much needed service to communities,” Calio said.

Airline customers today pay about $61 in taxes on a typical $300 ticket, rates higher than alcohol and tobacco, products that are taxed to discourage use, A4A said.

The President’s budget was defended by Department of Transportation (DOT) Secretary Ray LaHood, who noted that the budget requests more than $1 billion to advance modernization of  the airspace through “NextGen” satellite air traffic control technology that will increase on-time arrivals and make flying more efficient. The DOT did not address the tax issue.

Visit www.airlines.org and www.dot.gov

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