The seven US majors lobbying to replace the universal 10 per cent ticket tax have talked themselves into a corner and look set to end up with an extra $4 billion to pay over the next five years.

This is the estimate of one Washington lobbyist, who says he has never witnessed a lobbying campaign that has backfired so comprehensively on US airlines before. This lobbying effort by the seven has resulted in the drafting of two bills, which will increase the amount they have to pay over and above the original tax.

So desperate are they that American Airlines offered two free tickets to anywhere in the US to any of its employees who took part in a rally on Capitol Hill in mid-July in support of the tax that all seven majors really want.

The problem is that what they want - a House bill which reduces the ticket tax to 7.5 per cent and adds a flight segment fee - comes with some unpalatable additions: a tax on frequent flier programmes and a new departures and arrivals levy of $15.50 each to replace the current one-off $6 departure tax.

The alternative is even less palatable: a Senate bill that would renew the ticket tax and also tax the domestic portion of international flights. This proposal has the support of Alaska and Southwest Airlines and other low-fare operators.

So the seven majors - American Airlines, United Airlines, Northwest Airlines, Delta Air Lines, TWA, USAirways, and Continental Airlines - have put their weight behind an amendment to the House tax plan, which calls for a part excise tax of 7.5 per cent and part user tax. The debate in Congress continues but the current tax expires on 30 September.

Karen Walker

Source: Airline Business