The US Congress looks set to opt for a compromise over the ticket tax, while international pressure may force the Federal Aviation Administration to do the same over the controversial overflight fees.

Proposals for a new format for the ticket tax which were at the committee stage at presstime would see Congress voting on a reduction of the 10 per cent tax rate to 8 or 9 per cent, plus a fee per passenger of up to $3 that would be phased in over five years. In addition, the international departure tax could double to $6, international passengers might no longer be exempt from taxes on domestic sectors, and the tax may also be levied on tickets acquired through frequent flier miles.

The new format is unlikely to please either of the two airline groupings that have been lobbying strongly on the issue. The seven majors want the current system replaced with a user fee system, while the low-cost and smaller carriers want the system to stay the same.

Meanwhile, the FAA's proposal to implement overflight fees has prompted international outcry. The embassies of 20 countries plus the European Union have sent a diplomatic note to the US State Department protesting the methodology behind setting the fees and the lack of prior consultation, as required under international law.

Even senator John McCain, chairman of the Commerce, Science and Transportation Committee, seems to question the FAA's approach. In a letter to transportation secretary Rodney Slater, he asks him to 'take the time to ensure from the outset that our international obligations have been met and the foreign entities affected have been properly consulted'.


Source: Airline Business