Thu, Oct 06, 2011
Departure Taxes Proposed By President Obama Could Lead To
10,000 Airline Job Cuts
The Air Transport Association of America (ATA) said Tuesday that
nearly 10,000 airline industry jobs could be cut within one year if
two new proposed passenger security and airline departure taxes are
implemented. More broadly, nearly 181,000 jobs could be lost across
the economy related to reductions in aircraft manufacturing,
airports and supporting businesses, according to a new study.
"The job-killing equation is simple - add taxes and lose jobs.
Tripling the passenger security fee and creating a new $100
departure tax will have a devastating effect on the U.S. economy
and our customers, who already pay more in taxes for air travel
than they do for alcohol, tobacco and firearms. The proposed new
taxes will impact fares and reduce service, which equates to a
one-way ticket to the unemployment line for thousands of
Americans," said ATA President and CEO Nicholas E. Calio
(pictured).
Economists from the Oliver Wyman management consulting firm
estimated the potential job loss based on the cost of these taxes
on the industry and expected capacity cuts to accommodate the
additional costs. The study notes that airlines have limited
ability to pass through cost increases due to the elastic
relationship between pricing and demand.
If Congress approves the two taxes, according to the Oliver
Wyman calculations, passenger carriers could reduce capacity by 2.3
percent, which would lead to 9,700 jobs eliminated compared to 2011
employment levels.
The airline industry is the third greatest contributor to the
U.S. economy after energy and farming, yet it is among the least
profitable, Calio said. "The President is proposing a huge new tax
on the least profitable and most highly taxed industry in the
economy while all its competitors are left untouched. Airlines and
their passengers should not shoulder the burden to pay for the
country's security, or even worse, to pay off the national debt,"
Calio said.
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