Departure Taxes Proposed By President Obama Could Lead To 10,000 Airline Job Cuts

The Air Transport Association of America (ATA) said Tuesday that nearly 10,000 airline industry jobs could be cut within one year if two new proposed passenger security and airline departure taxes are implemented. More broadly, nearly 181,000 jobs could be lost across the economy related to reductions in aircraft manufacturing, airports and supporting businesses, according to a new study.

"The job-killing equation is simple - add taxes and lose jobs. Tripling the passenger security fee and creating a new $100 departure tax will have a devastating effect on the U.S. economy and our customers, who already pay more in taxes for air travel than they do for alcohol, tobacco and firearms. The proposed new taxes will impact fares and reduce service, which equates to a one-way ticket to the unemployment line for thousands of Americans," said ATA President and CEO Nicholas E. Calio (pictured).

Economists from the Oliver Wyman management consulting firm estimated the potential job loss based on the cost of these taxes on the industry and expected capacity cuts to accommodate the additional costs. The study notes that airlines have limited ability to pass through cost increases due to the elastic relationship between pricing and demand.

If Congress approves the two taxes, according to the Oliver Wyman calculations, passenger carriers could reduce capacity by 2.3 percent, which would lead to 9,700 jobs eliminated compared to 2011 employment levels.

The airline industry is the third greatest contributor to the U.S. economy after energy and farming, yet it is among the least profitable, Calio said. "The President is proposing a huge new tax on the least profitable and most highly taxed industry in the economy while all its competitors are left untouched. Airlines and their passengers should not shoulder the burden to pay for the country's security, or even worse, to pay off the national debt," Calio said.

FMI: www.stopairtaxnow.com