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Will FAA’s plan to lower airline passenger taxes fly?

The FAA reportedly wants to dramatically decrease passenger taxes on commercial flights. Then again, I want the Red Sox to win the World Series; doesn’t mean it’s gonna happen.

The plan calls for a reduction of the international arrival and departure tax and the elimination of the 7.5 percent ticket tax, the 6.25 percent cargo tax, the 7.5 percent frequent flyer tax, the domestic segment tax, and the Alaska/Hawaii tax, all effective October 1, 2008. (No wonder those nebulous airline taxes and fees are so high—there’s about a million different types.)

To make up for all the lost revenue, the FAA wants to charge all aircraft with a new user fee and increase government taxes on fuel. The idea is to distribute costs more evenly between commercial and private aircraft; commercial carriers argue that they currently pay a disproportianate share of air traffic costs.

Now, a word of warning: Don’t get too excited about these “tax cuts.”

Given the track record of, oh, I don’t know, every single airline ever, this potential reduction of costs is more likely to result in higher profit margins than it is lower prices. In other words, their cost of the pie may go down, but don’t expect them to pass the savings on to you.

That’s if the plan even passes. As you can imagine, with money at stake there’s bound to be some hard lobbying back and forth in Congress before the plan’s final outcome is settled.

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