The United States faces an aviation conundrum of massive proportions: Air travel demand is growing, but air travel infrastructure is crumbling. Addressing the latter without disturbing the former is no easy task, but the U.S. Travel Association has put forth a comprehensive plan that it believes will do the trick.
Presented to Congress yesterday, the plan calls for an increase in the Passenger Facility Charge (PFC), or airport tax, that funds airport improvements; currently $4.50 per airline ticket, airports under the proposed plan would have the option to increase the PFC to $8.50 per airline ticket.
To offset the PFC adjustment, which U.S. Travel insists is necessary to fix air travel infrastructure, the plan also calls for the elimination of five passenger aviation taxes: the Domestic Passenger Ticket Tax, the tax on international arrivals and departures, the Domestic Commercial Fuel Tax, the tax on mileage rewards, and the tax on flights between the continental United States and Alaska or Hawaii.
The net effect on the average federal ticket taxes and fees would be a reduction of between $9.50 and $25.50, based on a base average round-trip airfare of $340, according to U.S. Travel's calculations.
"The proposed tax changes produce another key pro-consumer effect: eliminating airlines' incentive to collect inordinate amounts of revenue through ancillary fees, such as for bags and ticket changes," U.S. Travel explained in a press release. "A 2009 ruling by the IRS held that those fees are not subject to taxation, unleashing a major move toward fees by airlines that has been roundly criticized by travelers. Eliminating the Domestic Passenger Ticket Tax would remove the airlines' incentive to shelter mass amounts of revenue in fees."
U.S. Travel is urging Congress to incorporate its suggestions this fall when lawmakers take up legislation reauthorizing funding for the Federal Aviation Administration (FAA).
Said U.S. Travel Association President and CEO Roger Dow: "FAA reauthorization presents an amazing opportunity to address a host of issues in our air travel system, and we should not squander it by only addressing a couple of the needs of our air travel system. The FAA bill should represent a comprehensive approach, and the policies it advances should be pro-competition, pro-growth, and pro-traveler -- I don't think there's a single individual or group out there who would say they disagree with that.
"The issue of infrastructure financing is particularly contentious. We continue to believe that the PFC, as a pure user fee, is the ideal means to address our severe infrastructure challenges. But finding the math to be able to include an airfare tax cut is a critical new piece, and has been expressly designed to address the concerns of some who have attacked the PFC approach.
"We are supremely confident that on this platform, we will be able to build strong support for modernizing our infrastructure financing model, fostering a competitive aviation marketplace that benefits travelers, and finally giving this country the air transportation system that it needs and deserves."