Travelers this summer may pay $25 to check a bag, $75 to change a reservation, or upwards of $100 for more legroom. But those fees could pale in comparison to the costs airlines are putting on taxpayers in 37 states.
A new report and website, 12billion.org, released recently calculate that in total airlines get tax breaks on over 12 billion gallons of jet fuel through obscure tax codes that cost states over an estimated $1 billion each year.
The first-of-its-kind analysis of all 50 states’ tax codes reveals that airlines reap the benefits of tax breaks for jet fuel. Despite the fact that these breaks were worth over an estimated $1 billion in 2013, airlines are simultaneously lobbying for new tax breaks.
An airline industry lobbying group is pushing for an increase of up to $27 million in the airlines’ tax break for jet fuel in Michigan, having already passed it out of committee and onto this fall’s state Senate docket. On Tuesday, August 12, 2014, American Airlines asked North Carolina lawmakers to extend or expand the state’s airline tax break on jet fuel, which expires on January 1, 2016.
As the airlines rebound from a decade of turbulence, lobbyists have mounted a campaign to maintain and grow the airlines’ tax breaks, which vary widely by state. In some states, airlines only pay tax on fuel used during takeoff. Other states exempt airlines’ fuel from environmental taxes or for multi-leg flights that originate domestically and continue abroad.
Since 2012, Georgia, Minnesota and Indiana all increased the value of tax breaks given to airlines on jet fuel — with breaks in those three states alone now worth nearly an estimated $100 million to the airlines. At the same time, airfare has increased faster than the cost of inflation even as fuel prices drop.
The report and website, 12billion.org, also highlight the gap between rising gas taxes drivers are paying at the pump and the low, or in some cases non-existent, fuel taxes airlines continue to enjoy. Additionally, airlines and airport officials have disagreed over how to fund airport construction projects.