As Airlines Raise Fees, Their Subsidy Advantage over Trains Grows

Experienced passenger train advocates are already familiar with the ways in which both federal and state governments subsidize air travel. But as the Washington Post revealed on Friday, airlines’ increasing reliance on increasing fees for things like checked baggage, instead of raising ticket fares, to keep up with the rising cost of jet fuel, means that federal taxpayers are being asked to pitch in even more to keep the aviation system running.

The bulk of the Federal Aviation Administration’s funding comes from the Airport and Airway Trust Fund, which is funded by taxes on airline tickets sold to passengers (as well as fees levied on airlines per flight segment, on air cargo waybills, flights arriving from other countries, and a tax on general aviation fuels).

FAA uses these funds to operate and improve the air traffic control system, perform research and development on aviation safety, mobility and environmental impact, and provide grants to airport authorities for construction and improvements to airports.

Additionally, a large chunk of the funding for airport facilities comes from local, regional and state governments by way of airport authorities, which are agencies formed by either a single local government or a compact among multiple local governments. Airport authorities, in most cases, own and manage airports, and establish policies for the airport’s development.

While Congress has become accustomed to using general tax revenues to keep the Highway Trust Fund solvent while refusing to raise the gasoline tax, even to keep up with inflation, airlines’ practice of shifting some of their revenues from fares to fees, which are not taxed, means an increase in the extent the general fund is being tapped to fund the FAA as well. From the Post:

In both fiscal 2009 and 2010, Congress appropriated an additional amount of almost $1 billion.

When the airlines kept ticket prices down by shifting $12.8 billion to baggage fees, they also saved almost $964 million in federal taxes they would have owed if they had hiked ticket prices by that amount.

That $1 billion is almost equal to Amtrak’s annual federal grant, and it’s only a small portion of the federal largesse that air travelers enjoy.

On top of that, part of the FAA’s mandate, established under the Eisenhower administration, is to promote and advocate air travel. The Federal Railroad Administration, on the other hand, has no similar authority when it comes to train travel. This means that the airlines, in essence, have a federal agency that actively pursues their interests. The FRA only advocates train travel insofar as its current leadership supports doing so.

Train travel advocates still have a lot of work ahead of us, and it begins with increasing the public’s awareness of a transportation playing field that is tilted away from rail—an environment in which Amtrak does amazingly well. To that end, please share this post and other information from NARP’s website with people you know.


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0 #5 Synergy Management 2014-03-27 02:42
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0 #4 Ron Wolfe 2013-01-19 01:48
We know that transporting freight by rail is more energy efficient . Passenger rails has a history of being safer and more relaxing than driving. Most people should know that a train carrying 150 to 400 people will consume far less fuel than 100 to 300 cars that it replaces. The problem is that we have legislators with little or no train experience who have no feel for advantages of travel by train and no idea how much tax payers subsidize roads.
Passenger rail service needs marketing! People need to be sold on the idea that the rich and famous prefer travel by train. Only ignorant people drive to a big city.
0 #3 Kurt Johnson 2012-12-15 00:04
The answer is that federal income tax payers should not subsidize any federal transportation operations. They should be paid by user fees - namely the gas tax. (That may change in the future with electric cars.).
+1 #2 Herb McLane 2012-11-14 17:26
We are really looking for a fair and balance national transportation system. The FRA needs to have direction from Congress to "promote and advocate rail travel by passengers and quick freight". I just took a 7 day trip in California on a California Rail Pass. I rode the Coast Starlight, the Surfliner and the San Joaquin starting in Dunsmuir, CA all the way to San Diego and back up via Fresno. The two of us used less than two gallons of fuel for the entire trip!! We need passenger rail transportation, we need more state owned rails and more routes. If we build it they will ride!!
+1 #1 Robert H Maybury 2012-10-25 21:55
It is extremely important that the public be informed of this unfair tax advantage (and subsidies to boot) that airlines have over passenger rail in this country.

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