Pilot union strongly backs drive to cut airline taxes

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Pilot union strongly backs drive to cut airline taxes

Major carriers are getting much-needed help in their quest to reduce taxes and security costs from the Air Line Pilots Association (ALPA), a group that often has been at odds with the industry over wages and related issues. The major carriers need all the help they can get. Neither Congress nor the Bush Administration is predisposed to reduce taxes and security costs.

Duane Woerth, president of ALPA, told the Senate Commerce Committee on Jan. 9 that the airline industry is experiencing problems of "catastrophic proportions." He noted that industry analysts estimate losses for 2002 will total $7.4 billion compared to a 2001 loss of $6.2 billion. He said it is imperative to provide "major tax relief" for the airline industry and shift the burden of security costs to the federal government.

According to Woerth, taxes are "choking the industry to death." He emphasized that airlines face a myriad of charges on passengers, fuel, cargo and security and stressed that airline travel is the highest taxed good or service available. He said carriers are able to keep far less of a percentage of their revenue generated from passenger ticket prices and cargo fees than carriers from many other countries.

Airline passengers who buy a single-connection roundtrip ticket for $200 can expect 25.6 percent of their ticket charge to go to the federal government in taxes and fees, according to Woerth. In 1972 and 1992, the taxes represented 7 percent and 15 percent, respectively, of the total ticket fare. A comparable trip for $100 gets taxed a massive 44.2 percent. "The airline industry's tax burden must be reduced," he said.

Woerth went on to say the bill to create the Department of Homeland Security does not include appropriations to pay for all the security programs that Congress and the Administration have created. "The federal government must assume responsibility for these costs, as they do for national defense, while at the same time ensuring that all security measures are in place and enforced," he said.

His testimony was very much in line with statements of Carol Hallett, the head of the Air Transport Association who will be stepping down on Feb. 3. She said the airline industry is headed toward an "economic meltdown" and that the industry may have to be nationalized if Congress and the Administration do not reduce taxes and security costs.

Woerth emphasized that nationalization is no solution. Instead, he said the Air Transportation Stabilization Board (ATSB) needs a "course correction." This is the board charged with reviewing loan guarantee applications from airlines. Soon after the Sept. 11 attacks, Congress set up a $10 billion loan guarantee fund, but only a small portion of that money has been awarded.

"Congress charged the ATSB with providing airlines with loan guarantees to help ailing airlines weather the effects of 9/11," he said. "But to date, it has failed to carry out this charge. It has turned its back on several airlines - two of which are in bankruptcy, and one that is out of business because they didn't get help. The Board must be held accountable. Either change the law so that the Board must carry out its mandate, or replace it with a more responsive and responsible entity."

As the major carriers continue to lobby Congress to reduce taxes and security costs, support also is coming from two key travel groups - the Business Travel Coalition and the National Business Travel Association.

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