Friday, January 20, 2006

Bailing out airlines

The federal government has spent some money lately bailing out airlines. The industry is not doing so hot.

Here's a new idea: how about we cut back taxes & fees on airfare? My tickets for Carnival cost $295.81. The taxes & fees cost $42.59. That's about 14% in taxes and fees. I know some of these fees are needed for the airports to exist, etc. But I'm sure a lot just goes to the federal government.

Until the airline industry is back on its feet, let's cut the taxes on air travel to induce more people to fly and give the airlines a little more wiggle room on prices. The end consumer will get cheaper flights and therefore fly more. The airlines can also charge a little more without the consumer really noticing - the prices are already way down!

My logic is that the government is using tax money to bail out the airlines; what if cutting out some of the taxes on the airfare would prevent needing to help the airlines federally? The government would probably be losing as much in potential tax income as they're spending right now to help out the industry - so it's just a different accounting method.

Thoughts? Suggestions? Criticisms? This is all based on high school economics and I have no figures to compare the tax income of flights vs the amount of federal money spent to bail out the airlines, or how many more people would fly with lower rates.

1 comment:

Vinnie said...

i think it's a decent idea