The U.S. Travel Association has proposed the elimination of
five passenger aviation taxes in order to offset an increase to the Passenger
Facility Charge (PFC).
The association on Tuesday presented a plan to Congress
"to fix the country's struggling air travel infrastructure and promote a
healthy, well-functioning passenger aviation system,” as part of the
reauthorization of the Federal Aviation Administration bill, which expires in
U.S. Travel contends that it is necessary to raise the PFC,
a federally regulated tax currently capped by Congress at $4.50 per passenger
per flight, in order to finance airport projects.
"We continue to believe that the PFC, as a pure user
fee, is the ideal means to address our severe infrastructure challenges,” said
U.S. Travel CEO Roger Dow. "But finding the math to be able to include an
airfare tax cut is a critical new piece, and has been expressly designed to
address the concerns of some who have attacked the PFC approach."
The plan calls to eliminate the Domestic Passenger Ticket
Tax; the tax on international arrivals and departures; the Domestic Commercial
Fuel Tax; the tax on mileage rewards; and the tax on flights between the
continental U.S. and Alaska or Hawaii.
The group said today that the net effect of its plan on the
average federal ticket taxes and fees would be a reduction of between $9.50 and
$25.50, based on an average roundtrip airfare of $340.
U.S. Travel and airports have been lobbying for an increase
in the PFC cap from $4.50 to $8.50 per passenger segment, while airlines, which
collect PFCs at the time of the ticket purchase, have lobbied to keep the cap
at its current level on the grounds that higher fees would make air travel more
"This plan would take care of the price sensitivity
argument and take it off the table,” said Dow on a conference call on Tuesday
U.S. Travel also said that the tax changes would eliminate
airlines' incentive to collect "inordinate amounts of revenue through
ancillary fees, such as for bags and ticket changes.”
Dow noted that a 2009 ruling by the IRS that ancillary fees
are not subject to taxation “unleashed" the current trend toward fees by
"Eliminating the Domestic Passenger Ticket Tax would
remove the airlines' incentive to shelter mass amounts of revenue in fees,” the