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Budget Deal to Make Air Travel More Expensive for Americans

by James Spurgeon, published
It would appear that Congress has finally done its job and will pass a budget. The House passed the legislation last week before adjourning for the holidays while the Senate is expected to do so this week. While we might hail the bipartisan effort to avoid another government shutdown for the next two years, there are still many problems with this budget deal.

The budget deal eliminated $45 billion in sequester cuts (equally on military and non-discretionary spending) that were set to take place at the beginning of 2014, and also another $18 billion in cuts that were set to hit in 2015. Sequester cuts were left in place beyond 2015. To help make up the loss of this money, Congress needed to get additional income, and that comes in the form of an increase in airline fees. Specifically, it targets the 9-11 security fee.

Currently, the 9-11 security fee is $2.50 for a nonstop flight and $5 for a flight with stops. There is also a cap at $5 so that a consumer cannot be charged more than that. The new budget increases the fee to $5.60 regardless if it is nonstop or not and eliminates the cap. It also takes the money generated out of its own account where it can only be spent in certain ways and places it in the general fund. This allows Congress to spend the additional revenue wherever it sees fit.

While $2.50 or even $5.60 may not seem like a lot, there are additional taxes and fees that are associated with a plane ticket. When all the "little" taxes and fees are added up, people suddenly realize they've been "nickled-and-dimed" out of much more.

So, what exactly are all the taxes and fees included in a plane ticket? (per person)

  • Domestic Passenger Ticket Tax: 7.5% of the base ticket price.
  • Flight Segment Tax: $4 per connection (this increases $0.10 each year)
  • International Travel Tax: $17.20 which is a departure and arrival tax
  • Passenger Facility Charge: $4.50... airports want this increased
  • September 11 Fee: Currently $2.50 and will likely be raised to $5.60

Those are some of the bigger taxes and fees, but there are still lesser ones that add to that ticket price:

  • Frequent Flyer Tax: 7.5%
  • Cargo Waybill Tax: 6.25%
  • Commercial Jet Fuel Tax: $0.04
  • Aviation Security Infrastructure Fee: Varies
  • APHIS Passenger Fee: $5
  • APHIS Aircraft Fee: $70.75
  • Customs User Fee: $5.50
  • Immigration User Fee: $7.00

And, just like with all of these other taxes and fees, the increase in the 9-11 security fee will be passed on to the consumer despite the billions in profits major airlines make and the already high costs of a plane ticket. In an article on The Hill, Delta Airlines CEO Richard Anderson stated that he would be doing just that -- passing along the increase to the consumer. According to the Memphis Business Journal, Delta Airlines profits increased 18 percent in 2012 to $1 billion.

Airlines want more people to fly; yet, they continue to raise prices for whatever reason they come up with -- which does include when the government pushes a tax on them. As prices rise, more and more people are not able to afford the ticket prices and are therefore left out. In 2007, a ticket to London could cost about $750. That same ticket in 2013 costs about $1,500 per person.

U.S. Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) have repeatedly said that the new budget does not raise or include new taxes. While that may be true in terms of income taxes, they apparently aren't counting the increase in the 9-11 security fee. Just because something is a fee doesn't mean it's not a tax. A fee is a tax by another name.

So yes, this budget does increase taxes. They should have just let the sequestration cuts stay in place and just allowed the different departments to structure the cuts how they wanted. There is enough waste in the budget as it is to accommodate the minuscule amount of cuts that the sequester had in place.

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