Faa Fees

[jcw]

All commerical carries pay a 7.5% tax on ticket revenue to fund the FAA. This advantages the discount carriers as they charge generall lower fares so they get "subsized use" of the air traffic control system.

This is a topic where the unions and management should be working together to correct. Why should Southwest pay any less to use the airspace than US Airways. It costs to the FAA are the same for a Southwest segment from PHL to MCO as it does USAirways but USAirways pays more as it generally has higher full coach fares (before go fares)

There was a good article in the Wall Street Journal about this yesterday and the discount carriers are fighting changes in the FAA charges. Also private pilots get to use the air space for free, once again paid for by the legacy carriers.

The playing field should be leveled and the unions should use their lobbying clout to push the changes through.

 

[sfb]

Be careful what you wish for. The excise taxes on airline tickets were revised back about ten years ago from the old scheme, which was a 10% tax, and gradually changed to the current scheme, which involves the 7.5% tax and a charge per segment indexed to inflation. The major carriers pushed for this move specifically to punish Southwest since they were one of the few carriers which had published itineraries involving two or more stops, especially for longer trips given that they predominantly flew short-haul. Of course, this backfired when Southwest and other LCC's began to exploit more point-to-point long-haul routes, and ended up with lower taxes for a single segment than the network carriers could offer on the same route connecting at a hub.

In any case, Southwest's yields last quarter (BTS source) were just under 90% of US Airways', and that's before the effects of passengers booking away this quarter due to the US Airways bankruptcy filing and talk of liquidation. Airlines generally advertise their fares before segment taxes, so you probably wouldn't see much of a competitive advantage in the marketplace.

One could also argue that since a regional jet or turboprop uses just as much airspace as a 737, that the taxes ought to be levied per aircraft. But you definitely don't want to go there when WN flies 137-seat 737's between PHL and HOU while US is flying 72-seat E170's.

 

[PHL]

I thought the ticket taxes were more for airport maintenance and passenger specific types of things.

Airlines pay a fuel tax that helps fund FAA ATC servics. So do all the other users of the airspace like cargo, corporate, law enforcement, charity, and light aircraft(general aviation). So that cost is purely based on the efficiency of the plane being flown. My Saratoga gets the same services that a 777 uses. But, should I be paying something closer to what that 777 operator pays? No way.

Your ideas have been bounced up and sown throughout the FAA for a while now. Other countries have user fees paid for each service used. Not gonna happen anytime soon, though.

 

[X-U]

All commerical carries pay a 7.5% tax on ticket revenue to fund the FAA. This advantages the discount carriers as they charge generall lower fares so they get "subsized use" of the air traffic control system.

This is a topic where the unions and management should be working together to correct. Why should Southwest pay any less to use the airspace than US Airways. It costs to the FAA are the same for a Southwest segment from PHL to MCO as it does USAirways but USAirways pays more as it generally has higher full coach fares (before go fares)

There was a good article in the Wall Street Journal about this yesterday and the discount carriers are fighting changes in the FAA charges. Also private pilots get to use the air space for free, once again paid for by the legacy carriers.

The playing field should be leveled and the unions should use their lobbying clout to push the changes through.

[post="230636"][/post]​

General Aviation does NOT get free use of airspace or ATC services. Check out the price of a gallon of avgas!

 

[BoeingBoy]

I thought the ticket taxes were more for airport maintenance and passenger specific types of things.

[post="230712"][/post]​

I believe the 7.5% ticket tax goes into the Aviation Trust Fund, which pays a large part of the FAA's operating budget (ATC operations, ATC modernatization, FAA operations, etc).

Looks like you're talking about the PFC's (Passenger Facility Charges) - they're used for non-ATC airport improvements and projects. That's a flat fee on each passenger that uses the airport, which is collected by the airlines by adding it on to the ticket price.

sfb is pretty correct in his analysis above - be careful what you wish for. Changing to something resembling "fee for service" would add a significant cost to all the RJ and turboprop operations. And who has the largest Express operation relative to mainline size? US Airways. Between the GE deal and rejecting some other mainline aircraft, Express will have close to 50% more planes than mainline and account for 40% or more of the total ASM's by the end of 2007 (if we're still around).

Jim

 

[mrman]

Then again you could lower fares

 

[700UW]

If the airlines are not making money now, how is lowering the fares going to help?

 

[UsPerfEngr]

jcw,

You can't just look at the low fairs the LCC's are charging and say that this alone shows that they aren't footing their share of the bill. The legacy carriers may charge more for a seat, but how many of their seats are they flying empty?

You have to look at revenue.

If I'm a legacy carrier who fills 72 seats on an EMB170 for $150 that's $10,800 in revenue. That's $810 in taxes at 7.5%

If I'm a LCC who fills 110 seats on a 737-300 for $100 that's #11,000 in revenue. For the same 7.5 % tax that's $825.

Who ends-up footing more of the bill? The legacy carrier? The LCC?

Answer: Neither, the passenger is paying for the system. I don't think any airlines quote all the taxes and fees upfront when they publish fares. In fact, most of the time you don't see the grand total until just before the final confirmation of purchase.

If anything BoeingBoy is right. The legacy carriers keep filling the skies with more and more RJ's, and the number of flights per people flown will soon (if not already) surpass pre 9/11 levels. This is where the burden and the ATC issues start. And I will hardly even mention the real traffic jams that RJ's and turboprops cause with their slower climb/cruise speeds....

 

[PHL]

It wasn't even 10 years ago that the price you saw advertised was the price you actually paid. Then came the airport $2 fees, then $3, then $4 and so forth.

Now it's the price advertised plus a gazillion fees you don't see til you get ready to click the 'buy' button. This isn't the airlines' fault, collectively. That much I get. But someone's going to have to step up(probably legislative action) and make these fees part of the advertised ticket price with taxes included. It would all be relative if all airlines were required to do it.

Rental car quotes often now include the final price with taxes for the exact reason mentioned above. If I saw a car for $19.99/day, I was pretty ticked to pay an actual price of $25/day after all the darn surcharges.