In yesterday’s post, we wrote about the negative impact high aviation taxes have for airline pilot jobs. ALPA and our allies in aviation labor and industry are also fighting against increases on existing aviation taxes, such as the TSA Security Fee. The U.S. Senate has proposed to increase the current TSA security $2.50 segment fee (limited to $5 in each direction) to $5 in each direction (regardless of number of segments). Imposing additional taxes like this would be devastating on an industry that is still trying to recover from years of losses, leading to huge revenue losses and reductions in service, both of which could reduce the pilot workforce.
Joakim Karlsson at MIT has studied how the Senate increase in the TSA security fee would impact airlines and their employees. He found that if airlines chose to absorb the full cost of the new tax, they would pay an additional $727 million per year in taxes- a huge sum for an industry with razor thin margins. This loss is airline revenue would have a direct negative impact on pilot jobs. Additionally, reductions in service would cause a $55 million loss to the FAA Airport and Airway Trust Fund (AATF) through declines in ticket revenue. Alternatively, if airlines passed the costs to consumers, they would stand to lose as much as $750 million per year due to estimated reductions in demand. With demand depressed, the AATF would also lose to the tune of $79 million. Clearly, as Karlsson demonstrates, there is no good option for airlines or passengers with an increased TSA security fee.
The proposed increase in the TSA security fee should be rejected and policymakers should instead strive to reform our aviation tax policy with a goal of leveling the playing field and increasing U.S. international competitiveness and advancing U.S. leadership in aviation safety.