Congress Ignores Aviation Industry's Pleas For Lower Taxes

by Leroy Baker, Tax-News.com, New York

07 June 2004

America’s airline executives lobbied unsuccessfully in Congress last week for lawmakers to bring in new measures to help the ailing industry, and their pleas for financial aid, lower aviation taxes and lower fees have this time fallen on deaf ears.

Describing the aviation industry’s situation as “perilous”, the chief executive of Continental, Gordon Bethune, argued that the sector has been unfairly saddled with the costs of funding various federal bodies, such as the Transportation Security Administration.

"We need a dose of common sense when it comes to taxes, fees and unfunded mandates. That 800-pound government jockey needs to consider a diet," he told the aviation subcommittee.

According to Bethune, 26% of the price of an average round trip is made up from taxes and security fees.

"The power to tax is the power to destroy and nowhere is that more evident than within the airline industry," he added.

However, following a $20 billion aid package in the wake of the September 11 attacks, lawmakers were not feeling in a particularly charitable mood.

John Mica, the Republican chairman of the aviation subcommittee, told the aviation chiefs that firms in the industry should start to "fend for themselves”

“Congress is not going to underwrite losing airline operations," he pledged.

Continental has warned that escalating fuel costs will push the company’s operating budget up by around $700 million this year. Elsewhere in the industry, major players are also suffering financial hardship including Delta, which is teetering on the brink of bankruptcy.

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