Monday, April 16, 2007

Small airports

Interesting article on Cnn.com today about how general airline taxes are being misused for smaller airports with corporate jets getting off cheap. The article leads with some misleading elements.
Passengers pay as many as six separate taxes and fees on a single airline ticket, adding up to more than $104 billion since 1997, the AP found. Yet these assessments often are overlooked by the millions who click the "buy" button to purchase tickets online, even though they can exceed 25 percent of the total airfare.

I work with those taxes everyday and have trained dozens of people on how to compute them. There are four basic ones on most domestic flights. Three of them are flat taxes (usually) totaling $10.40 per flight ($20.80 on a connection) and the fourth one is like a sales tax, 7.5% of the base fare. They only exceed 25 percent on very cheap tickets. The norm is lower.
The article goes on to list some questionable spending sprees from small airports, including this:
Austin Municipal Airport, about 90 miles south of Minneapolis, Minnesota, is home base for 25 small planes and three jets, at least two of which are owned by Hormel Foods, a Fortune 500 company with headquarters nearby. Since 2000, the airport received nearly $16 million in federal funding. More than two-thirds of the takeoffs and landing are by small, private planes.
Who knew? I've driven past that airport hundreds of times, even walked through their glass door back in 1990 (first trip to emergency room). What in the world did they find to spend 16 million dollars on? Do any of my Austin readers know about this? That's nearly $600,000 per plane. The mind baffles.
Read the list and you'll see a common thread. Different towns got hold of federal money and used it to enrich themselves. Building terminals and longer runways to attract business and such. None of that is the fault of corporations and their jets. If anything, it's an argument that too much total tax money is being collected. A similar system is used for our transportation system.
One other point:

A study released in February by the FAA said it cost $2.4 billion just to provide air traffic control for private and corporate planes in 2005. Yet the industry contributed just $516 million in fuel taxes that year. Another $500 million annually pays for weather forecasts and other preflight data for private pilots. These contribute to overall air safety, according to Andy Chebula, executive vice president for government affairs at the Aircraft Owners and Pilots Association, which represents more than 410,000 pilots and is lobbying heavily for retaining passenger taxes.

I'm not sure how much extra work goes into air traffic control for smaller planes (Heidi?) but weather reports are fairly general things that would need to be generated even if every small plane was grounded. I don't know about the preflight data and how much extra work goes into that (Ken?) but I'd guess a lot of that is necessarily duplicated too.
My favorite part?

"It's like going out to dinner and somebody buys the most expensive stuff and then says, 'Hey, let's divide this up among all the diners,"' he said. "Who should pay for that?" Commercial airlines support the proposed changes and say private aviation has been collecting huge taxpayer handouts that should go to airports that serve the general public. "We're saying users should pay in proportion to their share of system use," said Heimlich, of the Air Transport Association. "The current system isn't priced rationally."

Tell that to the business traveler that gets stuck paying $1300 for the day before travel from California to Minnesota while the tourist that booked two weeks earlier pays about $250. All to get the same seat with the same perks on the same flight. They may be right that an overhaul is the right way to go but their own price structure shows that they understand that not everyone pays the same amount for the same thing.

1 comment:

Brian said...

Back in 1995 the FAA contracted out 100's of airports air traffic. I think that is the money for smaller planes they are talking about. My paycheck comes from a different budget than the airline taxes. I know Austin bought all the houses on the south end of the airport and made a runway longer.