Delta Air Lines (NYSE: DAL) today called upon the House Appropriations Committee to refrain from raising taxes on airline travelers by proposing to double the passenger security tax from $2.50 per segment to $5.00, capped at $20 per round-trip. This tax increase would further erode the financial strength of an industry critical to the national economy and put the industry`s future at risk.
“Congress recognized the critical role airlines play in the nation’s financial health after the attacks of Sept. 11 when it authorized $5 billion in immediate cash to stabilize the airlines and provided $10 billion in loan guarantees,” said Delta Air Lines CEO and Chairman Leo F. Mullin. “That far-sighted federal support was an investment in the U.S. economy, not in an individual industry. It was provided because Congress clearly saw that the United States needs a strong and profitable airline industry as a key component of our long-term economic strength.
“Doubling the passenger security tax runs counter to those actions,” Mullin said. “It adds to the cost of flying for the public and it is very unlikely the industry can recoup the added costs through price increases.
“The safety and security of customers and employees must remain the industry`s highest priority and great strides have been made in restoring public confidence in air travel. However, aviation security is national security - and it must be treated and funded as a national security priority. Airline passengers should not be forced to bear the costs of national defense. “
“I have been stressing in recent months that we need to continue our efforts, through public-private partnership, to reduce the ‘hassle’ of flying,” said Mullin. “However, this proposal could supersede the hassle factor altogether as the prime barrier to recovery for our industry. If people cannot afford to pay for an overtaxed ticket, or airlines reduce service again to stem further financial losses as a result of this tax, then the Congress’ well-intentioned effort to aid our industry back in September will have been for naught.
The existing per-segment fee already disproportionately hits smaller communities harder, because the inherent nature of the major carriers’ hub-and-spoke system means connecting flights. Under a fee-per-segment scheme, passengers from smaller communities pay higher taxes than those who live in or near a hub city. Total taxes on a $200 domestic ticket with a new $20 security fee would average $60, or approximately 30 percent.
“It is pure fiction to suggest that such costs are just ‘passed on’ to consumers,” said Mullin. “Discretionary business travel and certainly leisure travel decisions will be affected by this 100 percent increase in this tax. The implications for economic recovery for vast areas of our nation, therefore, are truly staggering.”
Delta Air Lines, the world’s second largest carrier in terms of passengers carried and the leading U.S. airline across the Atlantic, offers 5,696 flights each day to 417 destinations in 73 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta’s worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please go to delta.com.