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U.S. Airline Industry Fears Security Fee Hikes

01/20/2010 -In reaction to the failed Christmas Day terrorist attack, U.S. airlines can expect the Obama administration and Congress topush for a hike in security fees to pay for the security upgrades, reports Bloomberg.The security fees could more than double for a one-way flight, according to government proposals offered before the botched Dec. 25 attack.

But U.S. airlines say they do not have the pricing power to pass off those security fees onto the passenger as the industry has experienced $60 billion in losses since 2001. More to the point, the airlines don't believe they should shoulder the financial burden.

Security costs should be borne by the government, said David Castelveter, spokesman for the Air Transport Association, whose members include Delta Air Lines Inc. and AMR Corp.’s American Airlines. “The airlines are not under attack; the country is under attack,” Castelveter said.

Since 9-11, travelers have paid a security fee for each leg of their trip. Southwest Airlines explainshow the fee is levied best:

The government-imposed September 11th Security Fee will apply to all airline tickets, including frequent flyer award travel, and will be calculated at $2.50 per flight number to a maximum of $5 per one-way or $10 per roundtrip. In other words, if you fly from Dallas to New Orleans and change planes in Houston (which means the flight number will also change) – you will be charged $5.

But as reported last year, the Obama administration says thecurrent security fee only covers 36 percent of security costs, leaving the government to pay the rest. The Department of Homeland Security signaled last year it would try to increase that $2.50 security fee by $1 annually for the next three years starting in fiscally year 2012, reports Bloomberg. The U.S. airline industry opposed increasing the fee and Congress let the issue fall by the wayside.

But the attempted attack by Umar Farouk Abdulmutallab has already started a flurry of aviation security spending. Before the attack, the Transportation Security Administration (TSA), the DHS agency responsible for aviation security, put in orders for 150 new whole body imagers. After the attempted attack, TSA said it will purchase an additional 300 machines. The machines cost about $130,000 to $170,000 per unit, reports Bloomberg.

Michael Boyd, president of the Boyd Group International Inc., an aviation consulting firm, told Bloomberg that "there's no question" Congress will enact new security fees. If DHS' proposed fee hike went into effect, then the security fee for a one-way flight would jump significantly by 2014,according to the congressional testimony of TSA Acting Administrator Gale Rossides in June.

"Beginning in FY 2012, the Fee would increase by $1.00 per year through FY 2014," she said. "Under the proposal, the maximum fee in FY 2014 and thereafter would be $5.50 per enplanement and $11.00 per one-way trip."

♦ Photo of security screening line at Washington Dulles International Airport by cafemama/Flickr