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Calio: Proposed Airline Taxes Would Harm Economy, Jobs

To quote Ronald Reagan, “There you go again!” “You,” in this case, is Congress because it again is considering piling more taxes on the airline industry and the traveling public.

The industry is a driver of the U.S. economy and competitiveness. Yet it is barely profitable, and the next few years will determine its long-term viability. Congress could do to the U.S. airline industry what it did to the U.S. maritime industry — kill it.

Doubling the passenger security fee from $2.50 to $5 and adding a $25-per-departure fee on commercial and general aviation users is counterproductive. We understand that our country is facing enormous financial challenges. The answer, however, is not to discourage business and leisure travel, which is so critical to economic recovery.

Calling these “user fees” is intellectually dishonest — they are additional taxes that would generate revenue to reduce the national debt, not enhance transportation services, as user fees are intended.

The airlines and our passengers are already overburdened, subject to taxes at levels exceeding those levied against alcohol and tobacco. Airlines and the traveling public are subject to 17 different federal taxes totaling almost $17 billion annually — up from $3.7 billion 20 years ago.

The U.S. airline industry’s federal tax burden on a typical $300 domestic round-trip ticket has almost tripled since 1972, from $22 to $61. The new taxes, as proposed, would add an additional $18 billion to the industry’s and to passengers’ tax bill during the next decade.

Increasing the aviation tax burden will undermine the economic recovery and threaten jobs. As Transportation Secretary Ray LaHood’s Future of Aviation Advisory Committee recently noted, the current federal aviation tax burden is an obstacle to enhancing the viability and global competitiveness of the U.S. airline industry. Increasing travelers’ tax burden will make things worse.

These fees would deprive the industry of $1.8 billion annually that could otherwise be used to hire more than 21,000 people. It would harm the industry’s already precarious financial health and negatively affect the fragile economic recovery. The $1.8 billion increase is one-half of the U.S. industry’s total profit in 2010.

According to the Federal Aviation Administration, commercial aviation drives $1.2 trillion in economic activity — more than 5 percent of annual U.S. gross domestic product — and 11 million jobs. Every 100 airline jobs support about 388 jobs outside the industry.

The two new proposed taxes will hinder travel demand, limit infrastructure investment, reduce global competitiveness and ultimately cost jobs — a bad outcome for our industry, our passengers and our country — and need to be stopped.

Nicholas E. Calio is president and CEO of the Air Transport Association of America.

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