Hike in airline security fee would raise fares, but do travelers care?

Is airline travel about to get even more expensive in 2014?

It will if a Department of Homeland Security proposal to double the existing $2.50 Sept.11 security fee to $5 each way ($10 round trip) is approved.

The travel industry is vehemently opposed to increasing the fee. The airline trade association, Airlines for America, recently rallied at several of the nation's airports and handed out airsickness bags bearing the message: “Are higher taxes on air travel making you ill?”

But should travelers really worry themselves sick about paying a $5 fee for tickets that could cost hundreds or-- in some cases-- thousands of dollars?

And what exactly is this tax?

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In 2002, when the TSA was created under the Department of Homeland Security, the Sept. 11 security fee was imposed to help offset the agency’s costs.  Then, according to a December 2009 report by The College of William & Mary, the agency had approximately 28,000 screeners in U.S. airports, and the estimated annual security cost for the airline industry totaled about $1 billion.

Since then, the TSA has hired more than 50,000 employees, installed high-technology explosive scanners at airports and, as a result, costs have mushroomed to $7.5 billion in FY 2012.  Still,  the tax has never been raised.

The TSA estimates that the $1.9 billion generated by the fee last year covered only about 25 percent of aviation security expenses.

Both Presidents George W. Bush and Barack Obama have tried to raise the fee before, but were rebuffed on each occasion by Congress. In those cases, the increased revenue was supposed to be earmarked for the TSA. This time, the revenue collected is being proposed to offset automatic spending cuts set to begin in January.

Currently, there is bipartisan support to raise the fee in budget negotiations, and key congressional Republicans, historically opposed to any increase, now support the plan. Bloomberg reports that even House Budget Committee Chairman Paul Ryan (R-Wis.) is behind the fee.

While this fee might ruffle some feathers, it’s far from the only cost that travelers incur. The Global Business Travel Association (GBTA) estimates that passengers pay about 20 percent in taxes on an average $300 airfare, thanks to a dizzying array of fees, including a Customs user fee ($5.50), passenger facility charges (up to $4.50 per segment), passenger ticket tax (7.5 percent), flight segment tax ($4), cargo waybill tax (6.25 percent), the APHIS passenger fee ($5) and a host of others.

“This is strictly a money grab from travelers,” said Charlie Leocha, the director of Consumer Travel Alliance, a non-profit organization that advocates for travel consumer rights. Leocha says that consumers are already paying higher taxes for airline travel than they do for cigarettes or alcohol, and the Sept. 11 security fee just adds to it.

“I could understand it (the increase) if they said, ‘TSA costs us more than the $2.50 you’re paying now, so we’re going to take the money and use it for TSA.’ At least then it would sound like we’re getting what we paid for,” he said.

Jean Medina, a spokesperson for Airlines for America, an industry group that lobbies on behalf of airlines, says more fees equates to less travel.  She maintains that the TSA is already fully funded and cites a GAO study which estimated that for every $1 increase in taxes or fees, passenger travel decreases by up to 2 percent.

“U.S. airlines and their passengers are already paying more than their fair share of aviation security taxes and fees,” she said in an email.  “The U.S. aviation industry and its customers are subject to 17 different federal taxes and fees, which totaled nearly $19 billion in 2012.  In FY 2013, U.S. airlines and passengers paid $2.3 billion in federal taxes and fees to TSA – a 100 percent increase from the amount collected in 2002.”

But Clifford Winston, a senior fellow at the Brooking Institution, says that it’s not necessarily a foregone conclusion that the increased revenue won't go to airline security.

“The benefits (of the increase) are hard to determine because they exist in the form of attacks that are prevented,” he said in an email.  “However, tests indicate that dangerous weapons still get past security and that much of the prevention of terrorist attacks comes from not letting terrorists into the country as opposed to keeping them and their weapons off planes.”

But will travelers, especially frequent fliers, really balk at paying an extra $5 on a round-trip flight? Shane Downey, the public policy director at GBTA, says they might.

“This is another example of government looking to the travel industry as a piggy bank,” he said. “When you start talking about increasing taxes, that raises concerns, because business travel has a huge impact on the economy.”

Yet, Ajay Gidwani, the owner of Intra World Travel and Tours, a travel agency based in Evanston, Ill., since 1985, said that travelers usually don’t notice the fees. “I doubt people will avoid taking a trip because of a $5 increase in fees,” he said.

But Gidwani says that if the fee is doubled, TSA should also be expected to do a better job of managing lines, treating customers professionally and screening out terrorists. “DHS has to get its act together,” he said.