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CNN Live At Daybreak

New Tax on Airline Tickets Covers Security Cost, Drives Price Up

Aired February 01, 2002 - 06:08   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Of course there's a price tag for all the additional security being implemented after September 11. Starting today air travelers will be paying a bit more to fly.

A new tax is being added to pay for security improvements and as CNN's Kathleen Koch reports, it comes on top of numerous other taxes and fees.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: 484.25. Wow, look at that.

KATHLEEN KOCH, CNN CORRESPONDENT: It's all in the fine print at the bottom of a ticket.

UNIDENTIFIED FEMALE: I've got 374 plus your taxes, so 484.

UNIDENTIFIED MALE: Boy, those taxes ...

UNIDENTIFIED FEMALE: Oh, you got about $100 worth of taxes in there.

KOCH: Taxes and fees including a new $10 maximum fee to help pay for aviation security. It can be a travel turnoff.

GREG PETERS, TRAVEL AGENT: "Paper said that the ticket was $158. Why are you charging me 198?" I have to try to explain to them because there are (UNINTELLIGIBLE) fees and security fees and fuel fees.

KOCH: Airlines say the congressionally mandated charges cost them customers.

CAROL HALLETT, AIR TRANSPORT ASSOCIATION: What we have found and economists can tell you this again and again, for every $1 increase in the price of a ticket, you will lose up to three passengers.

KOCH: Here's how it breaks down for a $200 ticket -- $11.16 covers the 7.5 percent federal ticket tax, $12 pays the segment fee to the federal government, $3 for each leg of the flight, $18 goes for the passenger facility charge to pay for airport improvement and finally $10 to fund security upgrades. The total $51.16 or 25 percent of the ticket cost. Many complain that until recent years, money from two of the fees put in a trust fund to modernize aviation was never spent.

DARRYL JENKINS, AVIATION INSTITUTE GEORGE WASHINGTON UNIVERSITY: We've been paying money into the trust fund for years to improve our air traffic system. This money is being held hostage to balance the budget.

KOCH: A congressman who helped free those trapped aviation funds from the federal budget battle insists that won't happen this time.

REP. JAMES OBERSTAR (D), MINNESOTA: You can be assured that all the revenue from the security fee that is imposed on tickets will go directly to the security costs.

KOCH: And agents say travelers will be watching to see if security improves.

MARY PETERS, OWNER FRIENDLY TRAVEL: They're going to have to perform for this tax, I believe. They're not -- the public's not going to accept it without performance.

KOCH (on camera): Some say if airlines really wanted to cut fees, they'd drop the up to $40-fuel surcharge some are still levying, but oil prices have dropped. But airlines are reluctant to because since 9/11, most are still losing money.

Kathleen Koch, CNN, Washington.

(END VIDEOTAPE)

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