Proposed Obama Budget Includes Higher Air Passenger Fees - Business Travel News

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Proposed Obama Budget Includes Higher Air Passenger Fees

February 14, 2012 - 11:05 AM ET

By Jay Boehmer and David Jonas

President Barack Obama in his fiscal year 2013 budget proposed to raise the aviation passenger security fee incrementally to $7.50 per one-way flight by 2018. The current fee, unchanged since it was enacted to fund the Transportation Security Administration after Sept. 11, 2001, is $2.50 per enplanement, capped at $5 each way of a passenger's itinerary. The proposed budget already has drawn criticism and Senate majority leader Harry Reid (D-Nev.) has been widely quoted as saying it won't even be put up for a vote this year.

Obama proposes in the fourth quarter of FY 2013 to change the aviation passenger security fee structure to "a per one-way trip fee structure so that passengers pay the fee only one time when traveling to their destination." The budget calls for "incremental increases of 50 cents from 2014 to 2018," after which the fee would remain at $7.50.

Obama's budget notes that the current fee "recovers only 43 percent of the Transportation Security Administration's aviation security costs, which have risen over the years while the fee has remained the same." According to the U.S. Department of Homeland Security, the restructured aviation passenger security fee would generate in 2013 an additional $317 million, "of which $117 million would be used to further offset the cost of federal aviation security operations and $200 million would contribute to federal deficit reduction."

Airline lobbying group Airlines For America railed against the plan, claiming it would prompt fare hikes, service cuts and job losses. "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," according to Airlines For America president and CEO Nicholas Calio.

Airlines For America and other industry groups a week earlier praised Congress for finalizing a reauthorization of the Federal Aviation Administration, partly because it included no new or higher aviation taxes and fees. That FAA bill awaits Obama's signature.

Meanwhile, "to reduce the deficit and more equitably share the cost of air traffic services across the aviation user community," the budget proposes a $100 per-flight fee for all aviation operators, including those in the business aviation sector. It would, according to the budget, generate about $7.4 billion during the next 10 years.

Overall, the Department of Transportation would see $74 billion in discretionary and mandatory funding, up 2 percent from enacted 2012 levels. That includes $47 billion during the next six years—$2.7 billion of which would be allocated during 2013—to "develop high-speed passenger rail corridors and improve intercity passenger rail service to significantly enhance the national rail network," and $1 billion in 2013 for NextGen air traffic control.

Meanwhile, the budget includes a $926 million reduction in airport grants. Federal funding would support smaller airports, while allowing larger airports "to increase non-federal passenger facility charges, thereby giving larger airports greater flexibility to generate their own revenue."

DHS would see funding total $39.5 billion, a decrease of 0.5 percent from enacted 2012 levels. While such "core" functions as border and aviation security would continue to be supported through "strong investments," the funding cut would be accomplished in "administrative categories," including travel and fleet management.

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