Get Ready to Say Hello to More Expensive Flights

Source: http://www.flickr.com/photos/openg/

If you are already a frequent flier frustrated by ever increasing airline fares, we have some bad news for you. Those ticket prices are only due to get higher, and as early as next year. Bloomberg reported Thursday that U.S. airlines scored big this week, and they won a repeal of $380 million in fees they are forced to pay for aviation security each year. This is a major win for airlines, as both they and their passengers have been subjected to exorbitant airport security fees since the Transportation Security Administration was created after September 11, 2001, but unfortunately, passengers didn’t fare as well as their carriers did, and they’ll witness that reality firsthand all too soon.

The House Rules Committee released a summary of the new budget accord Wednesday, and highlighted that the Aviation Security Infrastructure Fee will be repealed on October 1, 2014. That means that passengers will soon pay more than double what they did for the September 11 Security Fee, and the fee will rise to $5.60 each way of a trip, from $2.50 per flight segment or a maximum of $5 each way. The House summary also says that the TSA aviation-security costs covered by fees will rise from 30 percent to 43 percent, but airlines won’t bear the blunt of the new burden — passengers will.

Following the $380-million repeal, Bloomberg reports that lawmakers who set aviation policy were upset with the new settlement, with Bill Shuster, House Transportation and Infrastructure Committee Chair, asserting, “The government and the administration shouldn’t treat airline passengers to be like piggy banks. Those of us who fly are paying more than our fair share to reduce the deficit in this country.”

Both political parties surprisingly agree on increasing the fees now suffered by passengers, but other airlines and unions aren’t so sure it’s a good idea. Many highlight the risk of fliers becoming offended by the high prices and refusing to support the industry, but both parties still seem to agree that the new TSA fee structure will be a beneficial money raiser and ultimately generate $12.6 billion over 10 years.

The TSA has been allowed to charge carriers high annual fees ever since the terrorist attacks in 2011, and airlines paid $380.2 million in fiscal 2012, provoking them to ask for a repeal of the charges. Wednesday marked the day that carriers finally got what they wanted; the problem is, they just passed their woes down to their passengers.

But not all groups in the aviation industry see it that way.  According to Bloomberg, Jean Medina, a spokesperson for Airlines for America, explained that, “In reaching this deal, congressional leaders agreed to eliminate one of the 17 unique taxes on the aviation industry,” and she maintained, “Any relief we can get from our onerous tax burden ultimately benefits our customers.”

However, Delta Air Lines (NYSE:DAL) CEO Richard Anderson recognizes that it might not be so simple, as he highlighted Wednesday that, “Airfares are going to go up for consumers,” and explained, “The tax increase will not be absorbed by Delta. It’s a tax increase. Let’s call it what it is, not some service-fee fiction.”

The budget accord outlined by Bloomberg Thursday also evidenced a new deal for airports, and a good one. The TSA recently proposed a policy that would force U.S. airports to assume responsibility for monitoring exits from secure areas, but Bloomberg reports that that new arrangement was blocked by the most recent budget agreement, and now the airports won’t have to immediately pay an extra cost between $100 million and $200 million a year. Close to 20 airports filed a lawsuit challenging the policy on December 6, and the budget accord is now blocking the policy from taking off  immediately in January.

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