LEXIS-NEXIS® Academic Universe-Document

LEXIS-NEXIS® Academic

View Related Topics

January 12, 1999, TUESDAY, Late Sports Final Edition

SECTION: FINANCIAL; Pg. 43

LENGTH: 595 words

HEADLINE: White House mulls airport ticket tax hike

BYLINE: BY GLEN JOHNSON

DATELINE: WASHINGTON

BODY:
The Clinton administration, which failed last year in a bid to raise an airport ticket tax from $ 3 to $ 4, might try to increase the charge to $ 5 as part of a bill to renew the Federal Aviation Administration.

The passenger facility charge is a tax requested by local governments and earmarked for improvements at their airports. It must be approved by the Transportation Department. Charges are capped at $ 12 a ticket -- equal to four $ 3 charges per round trip -- but would rise to a maximum of $ 20 a ticket under the administration proposal.

The federal government also levies its own airline ticket tax: 8 percent of a passenger's airfare, plus $ 2 for each leg of a trip. The combination of taxes and charges can substantially add to the price of a ticket.

For example, the cost of a round trip from Washington to Orange County, Calif., via O'Hare Airport in Chicago climbs from $ 190 to $ 225 -- an increase of $ 35 -- when the tax, segment charges and facility charges are added. The airports in Washington and Chicago both charge $ 3 facility fees each way.

The administration has yet to announce its intentions, but the fee increase is one of the final elements being drafted into legislation that would reauthorize the FAA, according to a Transportation Department source who spoke on condition of anonymity.

In an interview in December, Transportation Secretary Rodney Slater said the nation's aviation system needs widespread investment, including money to modernize the air traffic control system, improve personnel training and rebuild airports.

Last year's administration proposal to raise the facility charge was supported by the Airports Council International-North America, which represents airport operators. It said airports will not be able to handle an expected surge in travel without significant capital investment.

The nation's airlines carried an estimated 615 million passengers in 1998. Within a decade, that figure is expected to exceed 1 billion a year.

In the past, airlines have opposed an increase in charges, since they add to the bottom line of a ticket, but do not go to the airlines themselves.

"More than enough money is collected through the various means, such as the airport (trust) program, existing (passenger facility charges), the fees paid by airlines and concession revenues," said Edward Merlis, head of legislative affairs at the Air Transport Association, an airline trade group.

The political prospects for an increase are uncertain.

Last week, Rep. Bud Shuster (R-Pa.), chairman of the House Transportation Committee, said he will try to pass legislation requiring that all federal ticket tax money be spent on airport improvements.

The money is deposited in the Airport and Airway Trust Fund, but Shuster said that of the $ 10 billion expected to be collected this year, only $ 5.6 billion will be spent. The rest, as in past years, will be left on the federal government ledger sheet to contribute to a balanced budget.

Shuster said that if he is successful in getting all tax money spent on airport improvements, he also would support an increase in the passenger facility charge.

"I used to be a purist; now I'll take the money any way I can get it," Shuster said.

The administration's 1998 proposal died in the Senate Commerce Committee, which is headed by John McCain (R-Ariz.). Separately, he has been fighting for legislation that would add flights out of congested airports and increase the permissible length of flights from Ronald Reagan Washington National Airport.

GRAPHIC: ASSOCIATED PRESS

LOAD-DATE: January 12, 1999