Trains good… planes bad…!
June 3, 2013, 11:16 a.m. EDT
White House budget proposals could mean consumers pay more
By Jennifer Waters, MarketWatch
Air-travel fees may be going up again, and if they do, you won’t have the airlines to blame—only the government.
With Congress reconvening today, battles over how to shrink the federal deficit will be front and center again—and new air passenger fees are among the proposals on the table. The Obama administration is calling in its fiscal 2014 budget for the so-called Sept. 11 security fee to rise up to threefold, raking in $25.9 billion over a decade – and adding several dollars to the price of many tickets.
The security-fee proposal seeks to raise the maximum Aviation Passenger Security Fee to $7.50 by 2019, through 50-cent annual increases. Today, the fee ranges from $2.50 to $5.00 for each one-way flight segment. The government plans to use roughly 70% of the new fees—or $18 billion—to cover the deficit. The rest would go to fund the Transportation Security Administration and the Federal Air Marshal Service over that 10-year period, the administration says.
Airlines, which have systematically upped fares and fees in recent years while crafting new ways to impose charges on air travelers, aren’t happy. “The president’s budget represents an unprecedented tax grab on the backs of airlines and their customers who already pay more than their fair share of taxes,” Nicholas Calio, chief executive of the trade group Airlines for America, said in a recent statement.
There are also other fee boosts included in the White House budget. The budget proposes a new $100-per-flight departure tax, which would be paid by the airlines, as well as raising the passenger facility charge to $8 from $4.50 per flight and hiking other fees related to customs and immigration.
In any case, the White House proposals should prompt travelers to take a closer look at the government fees they already pay. Here’s a rundown of what the fees mean and what they’re supposed to be used for:
Domestic passenger ticket tax: You might also see this identified as the U.S. Federal Transportation Tax on your ticket fare breakdown. The revenues from this tax, the flight segment tax and the international travel tax go to the Airport and Airway Trust Fund, a major funding source for the Federal Aviation Administration.
This particular levy is charged for any flight in the U.S. and is capped at 7.5% of the base ticket price. So a round-trip ticket that costs $300 before taxes and fees will have another $22.50 added to the fare price.
Flight segment tax: This tax has risen 10 cents a year in each of the last three years, and now stands at $3.90 for each leg of a given airline trip. So if you’re flying round trip from Grand Rapids, Mich., to Boston, with a stopover in Cleveland in each direction, you’ll see an extra $15.60 added to the ticket price—$3.90 for each of the four segments. There’s also an additional $8.60-per-passenger tax for any flight that departs from Alaska or Hawaii.
International travel tax: This costs $17.20 per person for international flights that begin or end in the U.S.
Passenger facility charge: Funds raised from this fee are directed toward airport improvements. They’re tied directly to projects that include safety and security improvements, facility expansions, and noise reduction, among many others. Right now this stands at a maximum of $4.50 per passenger; it’s paid to the airports where a given flight takes off and lands. The fee hasn’t been raised since April of 2001, and airports have been pushing for the better part of the last decade to raise fees to keep up with inflation. The Obama budget would bump it up to $8 per passenger.
Aviation passenger security fee: This is also called the Sept. 11 security fee and is paid to the Transportation Security Administration. Any trip that originates in the U.S. includes this fee, which is a minimum of $2.50 per flight segment. So on a round trip flight from Peoria, Ill., to Raleigh/Durham, N.C., with a stopover at O’Hare International Airport in Chicago, the fee will tack on at least another $10 to the total purchase price.
Jennifer Waters is a MarketWatch columnist based in Chicago.