Make Airline Passengers Pay Higher FeesEdward Glaeser
May 1 (Bloomberg) -- The recent U.S. airline delays reminded us that a dysfunctional government can also mess up our private lives.
Congress appears to have temporarily fixed the problem by allowing the Federal Aviation Administration to respond to sequestration more flexibly. Yet the basic problem remains: The federal government retains the ability to control our mobility as long as the FAA is financed with general tax revenue.
Passengers should bear the costs of their own travel. Taxpayers generally shouldn’t pick up the bill. In exchange, passengers should be entitled to reliable flights and shorter security lines, free from the mess of Washington politics.
The FAA attributed more than 1,200 delays on April 22, 1,025 on April 23 and 863 on April 24 to “staffing reductions resulting from the furlough” caused by sequestration. Over the same three days, the FAA said more than 4,500 delays resulted from “weather and other factors,” suggesting that the furlough was responsible for about 40 percent of late U.S. flights over those three days.
Congress quickly approved a bill that would allow the FAA to redirect $253 million to end the furloughs. President Barack Obama will probably sign it, even though he called it a “Band-Aid.” It is unfair, he says, to continue paying for services for relatively well-off air travelers while maintaining sequestration for services that affect poorer Americans.
FAA spending and social-welfare outlays shouldn’t have been part of the same debate in the first place. Food stamps and Head Start are transfer programs for those in need; whatever spending they deserve must come from general tax revenue. We should be debating the size of these programs -- which is what sequestration is all about -- because Americans differ in their opinions about the right size of the safety net.
When it comes to travel, however, taxpayers shouldn’t be on the hook. Government must ensure safety and help direct the construction of vast transportation projects, but general tax revenues shouldn’t pay for this infrastructure.
Seventy percent of the FAA’s spending in 2012 came from the Airport and Airway Trust Fund, which is financed by user-fee-like taxes, including a 7.5 percent ticket sales levy, a 4.3 cent-per-gallon fuel tax and a passenger charge of $3.90 per flight. For 2014, the Transportation Security Administration proposed $2.3 billion in user fees ($5 a trip) to help cover a $7.4 billion budget. As it now stands, about 31 percent of the FAA’s budget and more than 60 percent of the TSA’s is paid for out of general tax revenue.
According to the 2009 National Household Travel Survey, almost 59 percent of air travel is done by those in households earning more than $100,000 a year. On average, these wealthier Americans fly 10 times more than people in households earning about $50,000 annually.
So it should have been no surprise when a Rasmussen Reports poll showed that only 16 percent of Americans knew someone affected by the recent flight delays.
Sometimes we can make society fairer if the public sector spends less, a policy of progressive libertarianism. Making the FAA and TSA independent entities responsible for funding themselves by charging air passengers would reduce the overall deficit and economic inequality simultaneously.
Moreover, as last week’s delays suggest, a shift to independent funding could help the passengers themselves, even if they pay higher costs. User fees could be used to reduce congestion in airport lines and to improve the overall flying experience.
How much would this cost? The TSA’s projected 2014 budget shortfall is $5.1 billion; the FAA’s budget shortfall in 2012 was $4.6 billion. In 2012, there were about 640 million passengers, meaning that a $15 fee per flight segment would almost cover the complete shortfall. If air shippers cover some of this cost, as they should, then fees could be lower.
The time-honored economic principle is that efficiency requires people to pay the costs of their actions. Frequent fliers should cover the expenses that their lifestyle imposes on others, such as increasing the length of security lines. If the entire cost of the FAA and the TSA were paid for with fees for each flight segment, the segment charge would be $35, which would replace the current mixture of gas taxes and fees that rise with ticket prices.
There is a solid economic case for primarily using per-ticket charges because more-expensive seats don’t impose wildly higher costs on the TSA, the FAA or other passengers.
Since the time of Adam Smith, economists have argued that the wisest infrastructure investments can and should be paid for by future users. If a new bridge, highway or rail line won’t generate enough tolls or tickets to cover its costs, then it probably isn’t worth building. If the government is footing the bill, then all sorts of white-elephant projects start looking good.
When we paid for highways with gas taxes, we at least had the semblance of a user-charge system for our roads. Under Obama we have moved backward, toward funding with regular taxes and deficits.
The American Recovery and Reinvestment Act of 2009 awarded $50 billion to the Transportation Department by the end of 2012. Last year’s highway legislation authorized an additional $16.6 billion transfer of general tax revenue into the Highway Trust Fund, meaning that we senselessly subsidize people to congest highways.
The foes of big government shouldn’t fight against appropriate airline fees or highway tolls. They should fight against a system that makes taxpayers foot the bill for the few who benefit. Instead of taxpayer-financed subsidies, Americans need skies that are permanently clear of Washington’s budgetary breakdowns.
(Edward Glaeser, an economics professor at Harvard University, is a Bloomberg View columnist. He is the author of “Triumph of the City.” The opinions expressed are his own.)
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