Tax on airline flights could increase

Tax on airline flights could increase
The Obama administration says higher taxes on airline flights are needed to help reduce the deficit, pay for improvements at airports and add thousands of new immigration and customs officers to reduce wait times to process foreign visitors.
(Scott Eells, Bloomberg)

The cost of flying might be going up, but this time it’s not the airlines raising prices.

The Obama administration has proposed raising the taxes on air travel by about $14 per flight, a move airlines strongly oppose.


Higher taxes are needed to help reduce the deficit, pay for improvements at the nation’s airports and add thousands of new immigration and customs officers to reduce wait times to process foreign visitors, the administration says.

Airlines say higher taxes will backfire and hurt the economy.


“Our fragile economy and the millions of middle-class Americans who rely on air travel and shipping every day simply cannot afford tax increases that will drive up the cost of flying or limit service options to small communities across the country,” said Nicholas E. Calio, president and chief executive of Airlines for America, the trade group for the nation’s airlines.

Congress ignored similar hikes proposed by the Obama administration last year. Since then, the airlines themselves raised fares 3%, from an average of $364 in 2011 to $375 last year, according to the U.S. Bureau of Transportation Statistics.

But airline industry representatives say there is a difference between a fare hike and a tax increase.

Fare increases are used by the airlines to reinvest in services to passengers — such as buying new planes, said Katie Connell, a spokeswoman for Airlines for America.


“A tax or fee imposed by a third party that keeps the money does nothing for our customers,” she said, adding that most airlines earn an average profit of 37 cents per passenger.

But some industry experts say the proposed rise in taxes would only help keep up with inflation.

“It’s an inflationary adjustment,” said George Hobica, founder of the travel website “It’s not going to discourage anyone from flying.”


Life is not always smooth flying for airline executives, even with relatively stable profits and growing demand.

Take Ben Baldanza, chief executive of Spirit Airlines, the Florida-based no-frills carrier. He had been scheduled to appear on CBS’ “This Morning” show Wednesday. By coincidence, the latest survey by Consumer Reports was released that same day.

The consumer survey ranked Spirit dead last, and Baldanza was suddenly in the hot seat, asked to defend an airline that got a 50-point rating on a 100-point scale. He argued that price, not comfort or service, is the most important factor for fliers who choose Spirit.

“It worked out well because it gave us the opportunity to respond to being last on the list,” said Spirit spokeswoman Misty Pinson.

Baldanza wasn’t the only airline executive feeling the heat last week.

American Airlines’ vice president for customer care, Don Langford, agreed to field questions from passengers live on the airlines’ Twitter page. Not all the questions were friendly.

One passenger asked why she can’t get a blanket when flying in the economy section. Another flier said he saw a baggage handler throw his luggage onto a conveyor belt, and a third wondered why American Airlines fares are not as low as fares on Southwest Airlines.

Langford responded that blankets are not in high demand in the economy section, and he promised to report the reckless baggage handler to a supervisor.

As for the fares on Southwest, Langford offered the price-sensitive passenger a link to a website to search for fares on American Airlines, adding, “I hope you find one that works for you.”

If you stay at any of the Hilton Hotels & Resorts, Double Tree or Embassy Suites hotels in North, South and Central America, you will find only one brand of coffee and tea in each room.

Hilton Worldwide, one of the world’s largest hotel chains, has signed an exclusive agreement with Los Angeles-based Coffee Bean & Tea Leaf to provide the coffee and tea in the sealed packets that guests find in their rooms, starting this summer.

But if you are a fan of Starbucks or Seattle’s Best, don’t fret. The agreement won’t push out any coffee outlet that already operates in the hotels’ lobbies or restaurants.

“This is a way to shake things up for our guests without removing any walls,” said Jim Holthouser, executive vice president, global brand, for Hilton Worldwide.

One reason for the agreement, he said, was that Hilton will save money by buying in bulk.

Holthouser wouldn’t say how much the hotel chain would save, but he noted that guests at the three major hotel brands drink more than 100,000 cups of in-room coffee per day.

“You are talking about going through a whole lot of this stuff,” he said.