Obama tries again with modest airline fee increase
The Obama administration is trying again, as it did last fall, to require airlines and their passengers to help offset some of the cost of government services they use -- something that is already routine and seemingly widely accepted by travelers.
The Obama administration is trying again, as it did last fall, to require airlines and their passengers to help offset some of the cost of government services they use -- something that is already routine and seemingly widely accepted by travelers. The administration's fiscal 2013 budget proposal, released yesterday, includes a request to Congress to raise the $2.50 per segment fee for aviation security to $5, and then gradually increase it to $7.50 over five years. The proposal also seeks a $100 per flight fee on all aircraft takeoffs to help defray the costs of air-traffic control and to help reduce the federal deficit. Once again, the airlines are vehemently opposed to such increases.
The airlines' opposition to increasing fees is no surprise, but as I recently explored in some depth in a trade magazine article I wrote, the industry has been called hypocritical as it argues against the increases. The airlines contend that raising fees modestly will be a killer, leading to higher prices that will mean fewer customers, which in turn will lead to canceled service and abandonment of some routes and eventually to large job losses in the travel indstry. As my article asks: OK, so what has the effect been on travel from the airlines' own fees imposed over the last three years? And what was the impact on air traffic been of a dozen base fare increases in 2011? Which would have a greater negative effect, paying $2.50 or $5 more for security or paying $50 to $100 more per flight if you want to check a bag and sit in a specific aisle seat? Read my article in Business Travel Executive to learn more.
In the meantime, in case you're worried about the financial health of the always-fragile airline industry, a Wall Street analyst's report this morning estimates that industry revenue for every available seat it flies one mile will be up 9 percent or better in January and February and 7.5 percent in March vs. a year ago. I'm finding it hard to feel sorry for the airlines right now. How about you?