Flying in business class will be a costly affair in America

Published on : Thursday, January 2, 2014

airplane-business-class-300x225Business travellers have to pay double the tax from July 2014 in U.S.A. Although most American business leaders were pleased that Republicans and Democrats in Congress were able to agree a compromise budget deal, which President Barack Obama signed last Thursday in Hawaii. The deal removes the chances of further government shutdown and provides certainty about tax and government spending levels going forward. But for business travellers, the story has twist in the tail, the airline security fee assessed on each airline passenger will more than double, from $2.50 per segment to $5.60.

This change will be in effect in July, user fees will cover 43% of the costs of the Transportation Security Administration (TSA), up from the previous 30%, and should save the government more than $12 billion over the next decade. The airlines hate the fee increase, which they worry will hurt their business. But even after the change, non-flyers will continue subsidising security for air travellers.

Since air disasters and airborne terrorism can affect everyone by damaging the broader economy, taxpayers should chip in for airport security. But it still seems reasonable to ask passengers to cover the bulk of the bill. Charging them more will help the government’s finances and reduce pressure on other taxes, but it could have knock-on benefits, too, by drawing travellers’ attention to the high cost of the TSA and creating political pressure to limit unnecessary security procedures.

The airlines will note that other industries, including those involved with alcohol and ground transport, do not cover their own social costs. But that’s not necessarily an argument for reducing airline fees—it’s more of an argument for making sure that drinkers and drivers, as well as flyers, help pay for the broader social costs of their behaviour.

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