Also Proposes Changes In The Way The Fees Are Collected

While business aviation took a huge hit in President Obama's proposal to reduce the federal deficit, airlines did not go unscathed either ... and it's a pretty sure bet that the fee increases imposed for airlines would be passed directly on to the passengers.

In the document released Monday by the OMB outlined the President's plan to "Live Within Our Means," the administration proposed to "Reform the Aviation Passenger Security Fee to more accurately reflect the costs of aviation security.

"Reflecting its commitment to keeping air travel and commerce safe, the Administration has invested heavily in personnel, technology, and infrastructure to mitigate the constantly-evolving risks to aviation security. As risk changes, however, so too must the way in which we fund our aviation security efforts. In 2001, the Aviation and Transportation Security Act created the Aviation Passenger Security Fee, which was to be collected to off¬set the costs of the Transportation Security Administration’s (TSA’s) aviation security-related activities.

"The fee, in conjunction with a separate fee charged directly to air carriers, was put in place to ensure that the costs of aviation security were borne by the direct beneficiaries (e.g., air passengers, airlines) of aviation security services. The fee was originally intended to recover the full costs of aviation security. Since its establishment, however, the fee has been statutorily limited to $2.50 per passenger enplanement with a maximum fee of $5.00 per one-way trip. This recovers only 43 percent of TSA’s aviation security costs, which have risen over the years while the fee has remained the same.

"The Administration proposes both to raise the fee and change the manner in which it is collected.Modeled after Chairman Paul Ryan’s proposal in the House’s 2012 Concurrent Resolution on the Budget, the Administration’s proposal would:

• Replace the current “per-enplanement” fee structure with a “per one-way trip” fee structure so that passengers pay the fee only one time when travelling to their destination.
• Remove the current statutory fee limit and replace it with a statutory fee minimum of $5.00, with annual incremental increases of 50 cents from 2013 to 2017, resulting in a fee of $7.50 in 2017 and thereafter.
• Allow the Secretary of Homeland Security to adjust the fee (to an amount equal to or greater than the new statutory fee minimum) through regulation when necessary.
• Set aside a specific amount of fee revenue to be returned to the General Fund for deficit reduction over 10 years.

"The proposed fee would collect an estimated $8.8 billion in additional fee revenue over five years, and $24.9 billion over 10 years. The Administration’s proposal would direct $15 billion to be deposited into the General Fund for debt reduction, with any additional revenues in excess of this amount being applied as offsets to TSA’s discretionary appropriations."

Sounds like the Administration thinks that nearly anybody that flies should be paying more in some way. A major lobbying effort on behalf of business aviation is already underway, and it's fairly likely that airlines and consumer groups will get together to oppose this fee increase as well.

FMI: www.whitehouse.gov, www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf