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Obama administration takes flak over airline fee proposal

Two of the industry's largest trade groups say the hikes to help reduce the U.S. deficit would hurt the economy and spur job cuts.

September 21, 2011|By Hugo Martín, Los Angeles Times

The Obama administration's plan to increase fees and taxes on commercial passengers and corporate jets to help reduce the nation's debt has sparked loud protests from the airline industry.

Two of the world's largest airline trade groups said Tuesday that the fees and taxes proposed in President Obama's deficit reduction plan, which was sent Monday to Congress, would hurt the economy and force the industry to eliminate jobs.

To help cut the nation's debt, the administration has suggested doubling the aviation security fee imposed in response to the Sept. 11, 2001, terrorist attacks.

Each passenger is now charged $2.50 for each leg of a trip, with a maximum of $5 for a one-way trip. Under the proposal, the charge would be replaced with a standard $5-per-trip fee in 2012, with annual increases of 50 cents from 2013 to 2017.

The fee could bring in an additional $8.8 billion over five years and $24.9 billion over 10 years.

The administration also wants to raise a fee of $60 per flight to $100 per flight for all corporate planes that fly in controlled airspace, generating an estimated $11 billion over 10 years.

The Air Transport Assn., the trade group for the nation's largest airlines, said the industry already pays more than its share of taxes.

"We oppose any new taxes on airlines or their passengers," ATA President Nicholas E. Calio said.

The International Air Transport Assn., the trade group for the world's airlines, also issued a statement Tuesday, objecting to the proposed new fees.

"Airlines and their passengers are being asked to pay for national security, although it clearly is a responsibility of government," IATA Director General Tony Tyler said.

When it comes to adding its own fees, however, the airline industry has not been reluctant to act.

The world's largest airlines collected an estimated $21.46 billion in passenger fees and other extra revenue in 2010, about double the amount collected in 2008, according to a recent report by IdeaWorks Co., a Wisconsin consultant on airline fees, and Amadeus, a Madrid technology company for the travel industry.

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