Is President Obama Trying To Kill The Airline Industry? (DAL, UAL, UAUA)
Is President Obama trying to kill the airline industry with a new tax?
Airline industry officials said an increase in passenger-ticket taxes being considered by the Obama administration could kill travel demand, according to Nichola Calio, CEO of the Air Transport Association, the industry's chief lobbyist.
If higher taxes were put on airlines, then “fewer business trips are taken, tourism suffers,” Calio told the House aviation subcommittee yesterday. Calio said the rise in taxes over the past twenty years has been “breathtaking.”
In Obama's fiscal 2012 budget, which will be released February 14, there will likely be a cut of $1.1 billion in federal grants for airport construction projects.
In order to recoup the lost revenue, Congress might say that airports can raise their so-called passenger facility charges included in airlines' ticket prices to as much as $7 a flight segment, up from $4.50 now. This came from sources close to the situation who wished to remain anonymous because the issue has been revealed publicly yet.
Companies like Southwest Airlines Co. (NYSE: LUV), Delta Air Lines Inc. (NYSE: DAL), United Continental Holdings Inc. (NASDAQ: UAUA) and AMR Corp.'s American Airlines (NYSE: AMR) would be the most affected by the new regulations, and it would hurt the bottom lines of these companies.
Disclosure: no position in names mentioned
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