Airlines set to face security fee increase
NEW YORK (Bloomberg) — Added safety measures after last month's failed attempt to blow up a jetliner may make it harder for US airlines to thwart a security-fee increase the Obama administration has been seeking.
"There's no question" the administration and Congress will enact higher fees in response to the Christmas Day attempt, Michael Boyd, president of the Boyd Group International Inc., an aviation consulting firm, said in an interview.
US airlines, with collective losses of about $60 billion since 2001, say they lack pricing power to pass fees on to fliers. The government is buying more full-body scanners after it said a 23- year-old Nigerian man attempted to ignite explosives in his undergarments on a Detroit-bound flight.
Security costs should be borne by the government, said David Castelveter, a spokesman for the Air Transport Association, a Washington-based trade group whose members include Delta Air Lines Inc. and AMR Corp.'s American Airlines. "The airlines are not under attack; the country is under attack," Castelveter said.
Even before the December 25 attempt, President Barack Obama's Homeland Security Department last year proposed increasing a $2.50- a-passenger security fee by $1 annually for three years, starting in fiscal 2012. Airline industry groups opposed the increase, and Congress never acted on it.
The security fee hasn't risen since it was enacted in 2001. The Bush administration tried to raise it at least twice.
"There will be budget implications moving forward" with additional security after the Detroit attack, Homeland Security Secretary Janet Napolitano told a Senate panel today. Her comment, in response to a question as to what lawmakers could do to aid her, wasn't more specific as to the implications.
Airlines and their passengers paid $2.16 billion in security fees in fiscal 2009, according to the Air Transport Association. The increase Obama proposed last year would bring fees to $5.21 billion in fiscal 2014, according to Vaughn Cordle, managing partner of AirlineForecasts LLC.