Corporate Jets, Airline Passengers Face Higher Fees

Teni Sow | September 21, 2011 | 0 Comments

WASHINGTON — President Obama’s deficit reduction plan calls for raising fees on corporate jets and airline passengers as part of $1.5 trillion in new revenue over the next 10 years.

In a proposal certain to have the corporate jet industry lobby working overtime, the Obama administration’s blueprint calls for raising the per-flight fee on private jets from $60 to $100. The White House said the increase would generate an estimated $11 billion over the next decade.

In arguing for the higher fee, the administration noted that about two-thirds of the federal air traffic control system’s costs are financed by aviation excise taxes. Yet a large commercial aircraft currently pays between $1,300 to $2,000 in taxes for a flight from Los Angeles to San Francisco while a corporate jet flying the same route and guided by a similar level of service from Federal Aviation Administration air controllers, pays about $60.

The levy on corporate jets comes as no surprise: Obama has made the industry a favorite whipping boy in recent months in arguing against tax breaks for the rich. Still, a similar proposal by President George W. Bush was turned down in Congress under pressure from the corporate jet lobby.

The White House may find another proposed tax hike less popular with the public, though. Obama’s plan would tap deeper into consumers’ pockets with a 50 percent hike in the aviation passenger security fee currently tacked on to every airline ticket.

Enacted soon after the Sept. 11, 2001 terrorist attacks, the fee was originally intended to fund the entire Transportation Security Administration budget. In reality, it covers just 43 percent due to rising costs over the last decade.

Obama’s proposal to raise passenger fees, which was modeled on Rep. Paul Ryan’s 2012 budget proposal, would replace the current $5 maximum fee per one-way trip with a $5 minimum. It would then increase the tax by 50 cents each year until it reaches $7.50 in 2017.

The White House said the higher passenger fees would bring in an estimated $8.8 billion in additional revenue over five years, and $24.9 billion over 10 years. Of that, $15 billion would be skimmed off for debt reduction.

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