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Obama Aviation-Fee Plan ‘Job-Killing,’ Trade Group Head Says

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Oct. 18 (Bloomberg) -- President Barack Obama’s proposed new fees on the airline industry are “not fair” and will lead to additional job losses, the U.S. industry’s chief lobbyist said.

Nicholas Calio, president of the Washington-based Air Transport Association, said in a speech today that asking airlines to pay a new air-traffic control charge and collect higher security fees from passengers “allows policy makers to be shielded from the tax increases they impose.”

Calio, whose group represents carriers including Delta Air Lines Inc., US Airways Group Inc and United Continental Holdings Inc.’s United Airlines, spoke at the Aero Club of Washington.

Obama, in a deficit-reduction plan sent to the congressional so-called supercommittee last month, proposed charging corporate aircraft and airliners $100 a flight to pay for air-traffic control services. He also proposed adding 50 cents per one-way trip to the security fees paid by airline passengers, starting in 2013. Calio called the proposals “job-killing, growth-destroying tax increases.”

Obama’s Office of Management and Budget said that operators of private aircraft pay less than their fair share to fly. The air-traffic fee would generate $11 billion over 10 years, the plan said.

Passengers now pay up to $5 per one-way leg for security. That would increase by 50 cents a year until it reached $7.50 a flight in 2017 under the Obama proposal.

Security Fees

The higher fees would pay for all airport security costs, the White House said. Current fees pay 43 percent of the costs.

It would raise an estimated $24.9 billion over 10 years, $15 billion of which would be used to reduce the deficit, the White House said.

The cost of providing airport security has risen 35 percent per passenger since 2005, according to data compiled by Bloomberg Government.

The airline industry is the third most important to the U.S. economy behind energy and farming while “dead last” in profitability among 53 U.S. industry groups, Calio said.

The Obama fees would cause the loss of 10,000 airline and cargo-carrier jobs and 181,000 jobs throughout the U.S. economy, according to a ATA analysis.

Airlines would have to cut service and increase ticket prices, the industry group said. The industry lost $55 billion and suffered 41 bankruptcies from 2001 through 2010, Calio said.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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