Legislation reverses Full Fare Advertising Rule, ends ability for government to hide ticket tax hikes from customers
WASHINGTON, March 6, 2014 – Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, applauded legislation introduced by House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) and Rep. Peter DeFazio (D-OR) which ensures airline customers are aware of exactly how much of their ticket price goes to federal taxes.
The Department of Transportation’s (DOT) Full Fare Advertising (FFA) Rule unfairly prohibits airlines and travel agents from providing full disclosure of government-imposed taxes and fees in advertised prices, thereby masking the excessive federal tax rate on the cost of air travel. The Shuster-DeFazio legislation would bring air travel in line with virtually all other consumer products which are sold at a base price, with taxes added on at the point of purchase.
On a typical $300 roundtrip domestic ticket, customers pay $61 in federal taxes, or 20 percent of the ticket price. That number will increase to $63, or 21 percent, in July when the TSA passenger security tax more than doubles – from $2.50 per flight segment to $5.60 per one-way trip, costing passengers more than $1 billion annually.
In addition, the Administration’s FY2015 budget request includes $4.2 billion in new and higher aviation taxes and fees. Under the Administration’s plan, passengers would be subject to a $3.50 increase in the Passenger Facility Charge (PFC), a $2 increase in the customs user fee, a $2 increase in the immigration user fee, and a 40-cent increase in the TSA passenger security tax – on top of the $3.10 increase that takes effect in July. Without a change in the law, if the budget were approved, it would be portrayed as simply higher airfare.
“It’s a misnomer to characterize the current law as a consumer protection rule when it really protects the government, not airline passengers, and it’s disingenuous for Washington to hide the ball and not be held responsible for the taxes they impose on air travel,” said A4A President and CEO Nicholas E. Calio. “We appreciate the bipartisan leadership of Chairman Shuster and Reps. Peter DeFazio, Tom Graves, Nick Rahall, Frank LoBiondo and Rick Larsen for their push for greater government transparency, enabling airline customers to clearly know how much they are paying in federally-imposed taxes and fees every time they purchase a ticket.”
Calio also noted that DOT’s FFA Rule dampens demand for air travel and undermines U.S. economic growth by making the advertised price of an airline ticket artificially higher by requiring airlines to include government-imposed taxes and fees.
Annually, commercial aviation helps drive $1.5 trillion in U.S. economic activity and more than 10 million U.S. jobs. U.S. airlines fly 2.4 million passengers and more than 58,000 tons of cargo each day. Airlines for America (A4A) advocates on behalf of the American airline industry as a model of safety, customer service and environmental responsibility and as the indispensable network that drives our nation’s economy and global competitiveness.
A4A works collaboratively with the airlines, labor groups, Congress and the Administration to improve air travel for everyone.