U.S. airlines to feds: We need fewer taxes, fees and regulation

Posted on: 9:55 pm, December 5, 2012, by , updated on: 09:56pm, December 5, 2012

Southwest Airlines Jet

WASHINGTON (CNN) — The U.S. government should repeal old taxes and roll back new consumer protections and other rules as part of a comprehensive plan to ensure the industry’s financial health, major airlines said on Wednesday.

By failing to adopt a “National Airline Policy,” the airlines could wind up like the distressed maritime industry.

“We believe that we need a ‘National Airline Policy’ because it’s in the national interest,” said Nicholas Calio, president of Airlines for America, the trade association for the biggest commercial carriers.

Airlines have long complained about taxes and fees, especially those paid by passengers for security.

The industry announced the new policy initiative last summer, but addressed specifics this week in meetings with government officials and reporters.

They stressed the importance of the industry’s impact on the economy and outlined five priorities: reducing taxes, reforming regulations, modernizing the air traffic system, stabilizing energy prices and making changes to allow U.S. airlines to better compete with foreign carriers.

Executives said a national policy would bring more stability to an industry that has long been financially volatile — ultimately tied to the price of fuel and the ups and downs of the economy.

“If you go back 20 years, every major airline that was in existence 20 years ago is either gone, or gone bankrupt, with American (Airlines) being the last one,” said Gary Kelly, President and Chief Executive Officer of Southwest Airlines.

American is currently restructuring under Chapter 11 protection.

From 2000 to 2010, the industry lost $55 billion and 150,000 jobs — one-third of its workforce, the group said.

But the news hasn’t been all bad for U.S. airlines.

One executive said, the industry is “healthier, but not vibrant.” Airlines hired an additional 10,000 people this past year.

The industry has undergone big changes on its own over the past several years through mergers and other tough business decisions to improve overall efficiency and financial prospects.

Although fuel price are higher than last year and continue to pressure their finances, U.S. airlines have aggressively managed capacity and are charging higher fares on flights that are often full. They also collect fees for checked bags and other extras.

Revenues are up overall and a narrow profit is expected for the year for the 10 largest carriers, according to industry data from the first nine months of 2012.

Most items on the proposed National Airline Policy are long-held industry priorities.

Regarding taxes, airlines say they are subject to 17 different taxes and fees, adding about $61 to a typical round-trip ticket.

“We realize no profit off that and the people who are flying think that we’re getting that money,” Calio said.

Congress should repeal a 4.4 cents per gallon jet-fuel tax and freeze a security fee that funds Transportation Security Administration (TSA) passenger and bag screening at airports, Calio’s group said.

On regulations, the industry association lists a number of rules it wants repealed, including consumer protections enacted as part of passenger rights initiatives and pending legislation aimed at improving the ability of passengers to conduct price comparisons.

The airlines also have targeted a popular rule that targets long ground delays.

“Right now we are subject to what is really a hodge-podge of ill-thought-out regulations and taxes,” Calio said.

And the industry wants amendments to rules that limit pilot flight time and require student pilots to have at least 1,500 hours of experience before taking the co-pilot seat on a commercial flight.

Though airlines were deregulated in 1978, they “are still one of the most regulated sectors in the economy,” Calio said.

The airlines said the Federal Aviation Administration needs to expedite its modernization of the air traffic system — a slow moving and expensive effort to move from radar-based control to one relying on satellites.

The government also can remove obstacles to global competition, the trade group said.

“I would label the creep of the foreign carriers as insidious,” Calio said. “As the Middle Eastern carriers keep flying to more American cities … they’re taking away the international routes. It’s really the international routes in many cases where the greatest profits are. Those profits subsidize small- and medium-size routes within the United States.”

A4A said it would seek to have Congress enact legislation for elements of the National Airline Policy.