Airlines like Southwest
say taxes are unfair
A group of low-cost airlines is crying “foul” after the
U.S. government in September reinstated a $2.50 security tax per
trip segment.
“The imposition of taxes and fees by the government has an
enormous and disproportionate impact on our cost structure,” wrote
a coalition of nine low-fare carriers in a recent letter to
Congress.
According to the Washington, D.C.-based Air Transport
Association, government taxes and fees amount to 16.3 percent of a
$200 nonstop, roundtrip ticket. In comparison, these costs account
for 9.3 percent of an $800 ticket.
“If things are going to get more expensive, we’re afraid it will
get passed on,” said Tom Chapman, legislative council for
Dallas-based Southwest Airlines.
Dan Kasper, an airline economist working for the consulting firm
LECG, based in Emeryville, Calif., said flat charges adversely
affect discount carriers and ultimately could be passed on to
airline passengers through higher prices or smaller corporate
discounts.
Kasper added the charges could especially hurt short-haul routes
which bear the highest percentage of security fees if the cost
prompts business travelers to drive instead of fly.
Tempe, Ariz.-based America West Airlines felt the impact when it
had to slash service to two cities due to drive-market competition,
said Scott Bowers, the carrier’s vice president of revenue
management.
The prospects of price hikes and route cuts come at a crucial
time for low-fare airlines, as their use rises among business
travelers. A recent study by the Radnor, Pa.-based Business Travel
Coalition found more than 76 percent of 110 companies surveyed have
increased bookings on low-fare carriers, a trend 65 percent expect
will continue in 2004.