BUSINESS

Obama's proposed hike in airline fee sparks debate

Airport officials say hiking facility fee will help clear $15-billion backlog in needed improvements

A proposal in President Obama's latest budget to raise an airline passenger fee to help fund airport improvement projects has sparked debate among airlines, airports and travel industry leaders.

The increase in the passenger facility charge, to $8 per traveler per flight segment from $4.50, was included in Obama's $4-trillion budget released Monday to make up for a proposed cut in an existing grant program to fund airport improvement projects.

The fee, which has been capped at $4.50 since 2000, raised $2.8 billion in 2013, according to the U.S. Government Accountability Office. If adopted, the $8 fee would raise an additional $2.3 billion for airports in 2016, according to the GAO.

Airport operators and tourism advocates support the increase, saying airport improvements have long been needed and will help boost the travel industry.

"The travel community strongly supports the Obama administration’s efforts to modernize our failing air travel infrastructure through a long-overdue adjustment in the user fee funding mechanism," said Roger Dow, president of the U.S. Travel Assn., the largest trade group for the travel industry.

The Airports Council International-North America, which represents public airport operators, also supported the increase, saying U.S. airports have a backlog of $15.14 billion in airport improvement projects.

But the nation's airlines have opposed the increase, saying it will discourage travelers from flying and hurt the travel industry.

"Because consumers are very price sensitive when it comes to air travel, an unnecessary tax increase will reduce demand," Airlines for America, the trade group for the country's airlines, said in a statement. "That, in turn, will set back job growth, negatively impact travel and tourism through decreased demand and could limit air service to small and rural communities."

To read more about travel, tourism and the airline industry, follow me on Twitter at @hugomartin.

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