Proposed Doubling of Aviation Security Fees Puts Unfair Burden on Air Travelers

A proposed 100 percent increase
in the security fee charged to airline passengers must be rejected before it
gouges airline travelers and pushes the U.S. airline industry further into the
red, Continental Airlines (NYSE: CAL) said today.

Raising the security fee to $5 per flight segment will bring the total
cost for a typical round-trip, connecting flight itinerary to $20 per ticket.
This would bring the total taxes on a $100 ticket to a record $53 at a time
when economic conditions are weak and airlines are struggling to eliminate
catastrophic losses.

“Having the effect of a consumption tax, the higher fees will further
diminish the current lackluster demand for airline travel,” said Continental
Chairman and CEO Gordon Bethune.  “Legislators have justified taxes on
cigarettes and alcohol of up to 18 percent because they are trying to
discourage their use.  Unfortunately, imposing taxes as high as 53 percent on
airline tickets will have the same effect as the sin taxes, thereby
threatening the livelihoods of the millions of people working in this
industry.”

Continental said that airline security is a national safety issue and the
Transportation Security Agency should be funded from a broader tax base—
just like the armed forces, the FBI, the Federal Emergency Management Agency,
and the Environmental Protection Agency.

The airline also expressed concern that Congress is considering rescinding
a portion of the Airline Stabilization Act by limiting payments intended to
partially compensate the airline industry for its $9 billion pre-tax loss last
year, which stemmed mostly from the Sept. 11 attacks and the government-
mandated shut-down of the industry.

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Continental called on the House Appropriations Committee to refrain from
raising taxes on airline travelers at a time when the aviation industry is so
vulnerable to the nation`s weak economy.

“When Congress adds $10 to the cost of your airline ticket, the airlines
have to eat that cost unless the traveler ponies up the extra money,” Bethune
said.  “The economic reality is that neither the aviation industry nor the
American consumer is in the position to be paying more, as we have discovered
in our own efforts to try to break even on our ticket sales.”

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