Airline Opposition to Security Tax Increase Remains Firm

Washington, May 8, 2002—As deliberations to double the $2.50 passenger security fee continued today in the Appropriations Committee of the House of Representatives, the Air Transport Association of America (ATA) remained steadfast in its opposition to any tax or fee increase that would further harm airlines and their customers. In making its case, ATA also noted the strong opposition to this proposal by Americans for Tax Reform, Air Travelers Association, Business Travel Coalition and American Conservative Union.

ATA President and CEO Carol Hallett stated, “This proposal by some members of the House Appropriations Committee to double the security tax could not have come at a more critical time for airlines and their passengers. The airline industry remains in dire financial condition and at serious risk of a major financial failure that could have a devastating impact on the broader economy.” Hallett continued, “Neither our airlines nor our passengers can afford it and it should be rejected.”

According to ATA, total taxes on a $200 domestic ticket with a new $20 security fee would average $60, or approximately 30 percent. The association also noted the disproportionate share of taxes paid by airline passengers by comparing selected federal consumption taxes as a percentage of purchase price. For example, consumption taxes are 11 percent for a bottle of rum, 18 percent for a pack of cigarettes, but a staggering 44 percent for a $100 airline ticket.

ATA also stressed that aviation security is a function of national security, and must be treated and funded as a national security priority. Emphasizing that certain groups of taxpayers are not singled out to support the Department of Defense or law enforcement, ATA does not believe airline passengers should be targeted to shoulder the cost of protecting the nation from terrorism. Queried Hallett, “Should occupants of vulnerable or high-profile facilities be specially taxed? No—just as airline passengers should not be forced to bear the costs of national defense.”

Referencing the House Appropriations Committee’s proposal that would rescind at least $250 million of the Stabilization Act payments to the airlines and terminate the loan guarantee process, Hallett commented, “The airlines lost $7.7 billion last year, even with the economic stabilization payments, and have lost in excess of $2 billion in the first quarter of 2002. Congress recognized the critical role airlines play in the nation’s financial health when it authorized emergency cash assistance and established a loan guarantee program. Let the cash stabilization and loan guarantee programs run their course as enacted. Amending them now will exacerbate the harm suffered by this industry and its customers.”


As evidence of its objections, ATA released the attached correspondence from Hallett to Speaker of the House Dennis Hastert. Identical letters were sent to House Majority Leader Richard Armey, House Democratic Leader Richard Gephardt and House Majority Whip Tom DeLay.

The Air Transport Association of America, Inc. is the trade association for leading U.S. airlines. ATA members transport over 95 percent of all the passenger and cargo traffic in the United States.