"House Mulls $4 Billion TSA Budget Increase -- Hike In Passenger Security Fee Dropped From Bill"

Wednesday, May 22, 2002 

House Mulls $4 Billion TSA Budget Increase -- Hike In Passenger Security
Fee Dropped From Bill
Airport Security Report


The Transportation Security Administration (TSA) could receive another
$4 billion in fiscal year 2002 funding. But that money won't be coming
from a doubling of the airline passenger security fee after the U.S.
House Appropriations Committee dropped the proposed hike from the
emergency funding bill. 

The controversial proposal to increase the security fee would have
required passengers to pay a maximum of $20 per roundtrip ticket at a
time when airlines are struggling financially. Airline enplanements are
down about 10 percent from last year, and airline yields are down about
20 percent, according to Sam Buttrick, an industry analyst with UBS
Warburg. Many airlines drastically reduced ticket prices after Sept. 11
in an effort to encourage the public to have confidence in the aviation
industry, a strategy that has led to a drastic cut in profits. 

The committee's initial proposal included several provisions that
airlines and the House Transportation and Infrastructure Committee
strongly opposed. Specifically, the bill would have doubled the security
fees that passengers pay from $5 to $10 per one-way trip. This was
expected to generate $150 million in the remaining months of the 2002
fiscal year. During the bill's markup, the committee agreed to drop the
provision. The panel made up the funding shortfall by cutting funding
for cockpit doors by $75 million and cutting TSA overhead by $75
million. 

The total cost of the FY 2002 supplemental proposed by Rep. Bill Young
(R-Fla.), the committee's chairman, is nearly $30 billion, about $2.9
billion more than the Bush Administration's request. The FY 2002
supplemental spending bill provides $5.8 billion for homeland security,
more than $500 million over the administration's request. The TSA is
scheduled to receive $4 billion of the $4.4 billion requested by the
administration if the bill is passed. 

Emergency Funding Bill Specifics 

The House's emergency spending bill for fiscal year 2002 would give TSA
$4 billion in addition fiscal year funding, $400 million below the
agency's request. The funding includes: 

   * $650 million for purchase of explosive detection systems and
explosive trace detectors for checked baggage screening

   * $850 million for construction and installation of these machines at
airports

   * $200 million to reimburse airports for implementing federal
security mandates

   * $100 million to reimburse carriers for installing hardened cockpit
doors

   * $75 million for state and local law enforcement reimbursement, and

   * A provision requiring TSA to pay for space at airports.

Opposition to the Security Fee Increase 

Rep. Don Young (R-AK) and Rep. James Oberstar (D-MN): "Imposing such a
significant cost increase on airline tickets would exacerbate the
financial problems of an already-ailing airline industry, which is still
losing millions of dollars each day in the wake of September 11." 

Darryl Jenkins, George Washington University Aviation Institute
Director: "The demand for business and leisure travel is being
stimulated primarily by airlines lowering their prices to encourage
people to fly, but at fares so low that the industry is bleeding money.
If the airlines had the ability to raise prices and make them stick,
they would have do so in this post-September 11 environment."


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