New approach to taxes and regulations
March 13, 2012, 10:12 am
The International Air Transport Association is urging U.S. lawmakers to improve aviation competitiveness by easing the tax and regulatory obligations placed on the airline industry.
Tony Tyler, CEO and director general of the IATA, said the aviation industry in the United States is responsible for $1.3 trillion in annual economic activity and supports 10.5 million jobs while accounting for 5.2 percent of the national GDP. The United States has a large market for commercial aviation, and policymakers should recognize the benefit of aviation and help support its growth through legislation. Tyler wants lawmakers at the local, state and national levels to focus on making aviation a catalyst for economic activity, not further burden the industry with taxes and regulations.
"If creating jobs and encouraging economic growth is a national policy priority, then the lack of a coordinated national policy on aviation is shocking," Tyler said. "A national policy is needed and it must be aligned with the economic needs of communities, states and regions - with the goal of improving the competitiveness of the U.S. aviation industry."
In the past 10 years, Tyler said the aviation industry has lost more than $62.5 billion in revenue, laid off 25 percent of its workforce and reduced U.S. departures by 21 percent due to economic factors and the effects of the 9/11 terrorist attacks. This aviation decline negatively affected many local economies, making it difficult for them to maintain services. These hardships illustrate the disconnect between what is happening locally and what the focus is on the national level.
"The Administration’s 2013 budget proposal heaps even more taxes on aviation, with much of the receipts used to balance the budget or reduce the deficit," Tyler said. "When Washington does look beyond taxes, the agenda often bogs down on complex problems that defy easy regulatory solutions or commercial matters that should be left to the workings of the free market."
Illustrating Tyler's argument, lawmakers have recently created three new policy initiatives to micromanage the way airlines in the United States compete. Under the new measures, airlines must hold all reservations for 24 hours, which ties up valuable inventory that could be applied to territories outside the United States.
The measures also require airlines to include all fees and taxes in the price of a ticket in advertisements, without imposing the same demands on the hotel and cruise industries. Plus, airlines might have to sell their products through global distribution systems.
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