Wednesday, February 16, 2011

Tax increase could hurt airlines

Dallas-based Southwest Airlines Co. and Fort Worth, Texas-based American Airlines Inc. ‎could be hurt by a proposed increase in passenger-ticket taxes being considered by President Barack Obama.

In Obama’s proposed fiscal 2012 budget, there will likely be a cut of $1.1 billion — or 31 percent — of federal grants for airport construction projects, according to media reports.

Obama may also suggest the passenger facility charges included in airline ticket prices be increased from $4.50 a flight segment to as much as $7 to recoup lost revenue and bring in $1.3 billion more for projects annually, according to the report.

There’s been two decades of burdensome taxes on airline carriers, placing purchasing airline tickets in the same taxed category as alcohol and tobacco, said Jean Medina, an Air Transport Association spokeswoman.

The proposed increase on passenger-ticket taxes would further penalize passengers and airlines, she said.

“Passengers are already overburdened and this will discourage them from purchasing airfare and will hurt the airline industry that drives the economy and jobs,” Medina said.

The airline industry accounts for $1.1 trillion in annual economic impact and 11 million jobs, she said.

(Candace Carlisle - St. Louis Business Journal)

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