NCPA - National Center for Policy Analysis

Who Should Pay for Airline Security?

April 9, 2003

The nation's airlines say passengers are not willing to pay the $2.50 tax levied on each flight segment as part of the post-Sept. 11 airport-security effort. The pressure to cut airfares is so great, the airlines say, that carriers can't pass on the tax. Instead they pay it themselves out of ticket revenue. For airlines teetering on the brink of bankruptcy or liquidation, it's a critical issue.

The argument over who pays that $2.50 extra per flight goes to the core of a broader debate about who should pay for aviation security.

Critics say that Congress is willing to use security concerns as an excuse to tap taxpayers for help. This week, sponsors of an aid package are expected to put the finishing touches on a spending bill that would provide about $3 billion to airlines and airports for security expenses.

  • Among other things, the funds would be used to reimburse the airlines for fortifying the cockpit doors on aircraft.
  • The package, part of the emergency Iraq war spending bill, also includes a six-month holiday from paying the $2.50 ticket tax.

As free-market economists see it, airline passengers should pay for security because they receive the benefits of safe planes.

If consumers face the costs, they'll be able to make economic judgments about the benefits and risks of air travel as compared with going by road or rail, said Chris Edwards, director of fiscal policy at the Cato Institute.

"Security costs should ultimately flow through to the consumers of air travel in ticket prices," Edwards said. "The problem with taxpayer subsidies is that ultimately consumers are not making efficient market decisions about the most efficient mode of transportation."

Source: Robert Dodge, "Who should pay for aviation security?" Dallas Morning News, April 7, 2003.


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