Obama Taxes Will Force Higher Air Fares and Reduce Service

The Air Transport Association (ATA), representing leading U.S. airlines, urged members of Congress to reject President Obama’s plan to impose $3.5 billion annually in new taxes on airlines and their passengers to pay off the country’s budget deficit. If the airline industry is burdened with billions of dollars in new taxes, ATA warned that its members will have no choice but to raise fares or reduce service, which will mean fewer jobs.

“Airlines are the physical Internet, connecting people, products and the world, driving the global economy and creating millions of jobs. To further burden this already financially challenged industry is both illogical and a job destroyer. The results will be devastating to the U.S. economy,” said ATA CEO and President Nicholas E. Calio.

“The U.S. government continues to use the airline industry as a cash cow, rather than seeing airlines as a growth enabler and understanding the strategic nature of aviation and what it takes to support one of our country’s most critical industries,” Calio said.

Today, federal taxes and fees in the United States constitute $61, or 20 percent, of the cost of a typical $300 domestic round-trip ticket, higher than taxes paid for alcohol, tobacco or guns. The overall federal aviation tax burden in the United States has tripled since 1972.

“We are saddled with tax and regulatory mandates and restrictions that are unheard of for other industries,” Calio said.

Calio offered a global perspective and compared increasingly punitive U.S. government policies with other countries that view aviation as a strategic asset and work cooperatively with airlines to ensure successful growth. “Governments in China, Brazil, India and the Middle East understand the competitive necessity and opportunity a vibrant aviation system provides,” Calio said.

Rather than further taxing overburdened airline passengers, ATA urged Congress to focus its attention on supporting a National Airline Policy.

“We are ready and willing to work collaboratively with the U.S. Government on our nation’s priorities for the future, using all the good work that has already been done. We need an airline policy that will treat our airlines like the global businesses they are, and enable them to operate as such,” Calio said.

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