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Obama budget proposes new security, airline fees

(Reuters) - Airlines and their passengers would pay up to $32 billion in new air traffic and security fees over 10 years, and grants to big airports would fall sharply under White House budget proposals on Monday aimed at deficit reduction.

The Obama administration wants major carriers, their passengers, business jets and airports to pick up more of the costs of air travel and airport improvements that for years have been borne by taxpayers.

New fees are sure to trigger strong opposition from airlines and other aviation groups who argue that the industry is already over-taxed and over-regulated.

Ideas quietly floated and then discarded during congressional budget negotiations last summer reemerged in the fiscal 2013 transportation and homeland security portions of the White House budget sent to Congress that outlines $4 trillion in deficit reduction.

Under the proposal, ticket fees that help pay for passenger and bag security screening at more than 400 U.S. airports would double to a mandatory minimum of $5 per one-way trip.

The fee would jump 50 cents per year beginning in 2014, raising the total to $7.50 in 2018. The administration hopes the changes will yield between $9 billion and $25.5 billion in new revenues over 10 years.

The budget proposal would also permit the Homeland Security Department to raise the fee on its own after that through regulation.

Congress has resisted previous efforts by the Bush and Obama administrations to raise security fees, which cover less than half of the cost annually of screening airline passengers and their bags for weapons and bombs.

But airlines worry that Congress may yield to the enormous pressure to cut federal spending. Airlines are also making money again on higher fares, which could make it more difficult to convince lawmakers to see things their way.

The administration is also proposing a $100 departure fee for airlines, business jets and other aircraft to help cover the costs of Federal Aviation Administration (FAA) air traffic control.

The new fee would raise $7.4 billion over 10 years, the administration estimates.

The budget also proposes to cut guaranteed grant funding for medium and large airports by $926 million in 2013 to $2.4 billion. Instead, airports would be permitted flexibility to increase certain ticket charges to raise revenue on their own for airport construction projects.

Airports have unsuccessfully pushed for congressional authority to raise more money through higher fees, which are capped at $4.50 per passenger, per flight.

(Reporting By John Crawley; Editing by Tim Dobbyn)

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