Revised Legislation Would Increase Fuel Taxes For All Newark Airlines, Not Just United

A couple of weeks ago I wrote about the controversial change that the New Jersey legislature was planning on making that would eliminate a significant tax exemption on fuel for airlines.

Most states tax all jet fuel that’s purchased by an airline in the state, while New Jersey currently only taxes the fuel that is consumed during the “burnout” period, which includes taxi and takeoff. The state planned to eliminate this exemption in order to fund a new PATH train extension to Newark Airport, that would cost at least $700 million.

What’s interesting is how the state was planning on introducing this. Rather than increasing the taxes on fuel burn for all airlines, the plan was to only increase it for airlines that transport more than eight million passengers per year from New Jersey.

That meant that the tax exemption would only be eliminated for United, and not for other airlines. United Airlines thought that was unfair, and even threatened to reduce their presence at Newark Airport. I can see both sides of this:

  • United has invested a ton of money at Newark and is a huge employer in the state of New Jersey, so this seems like a slap in the face to them
  • At the same time, the state probably knows that United isn’t going anywhere, while an airline with a smaller presence at the airport may be more likely to reduce service to the airport if this exemption was eliminated

It seems that the state has had a change of heart in terms of this policy.

As reported by Bloomberg, a new version of the bill eliminates this exemption for all airlines flying out of Newark, and not just United Airlines. The bill still has to be passed by the legislature and signed by the governor to become law, so we’ll see if it ends up happening.

Bottom line

If the state is going to eliminate this tax exemption, eliminating it for all airlines seems like the way to go about it. In the NYC-area, airlines don’t exactly have many options. Both LGA and JFK are heavily slot-restricted so unless an airline wants to stop serving the NYC-area, it’s unlikely they’d cut flights.

(Tip of the hat to Live and Let’s Fly)

Comments

  1. I would pay more taxes and live a civilized life than pay less and then have to buy guns because there are crimes due to poverty and no police force to speak of and bad education system that teaches jesus more than science and polluted air and water.

    North Carolina is polluted with coal ash and pig waste after the hurricane. I hope the Republicans will pray to jesus to save them while they drink polluted water. Please do not rely on the government you self reliant, pull yourself up by the bootstrap, hardy, local control people.

    Live free or die in pig feces but DO NOT ask for government help.

  2. EWR is a garbage airport needs to be demolished and rebuilt. That kind of low standard is fine for United flyers but it always pains me when I’ve got travel out of there. It’s got the remoteness of JFK with the dilapidation of LaGuardia. With the exception of the 20 or so C gates that got built this millenium, the rest of the airport is worse than any part of JFK (that’s a -very- low bar) , let alone any major city.

    The airtrain is unreliable and way too slow , security isn’t connected within the same terminal let alone across the airport, post-security services are nil, and it’s clear nothing’s been touched with a scrub brush since the 70’s.

  3. @Alpha: I’d agree with you on all of that except the “remoteness” part. For those living in Hudson County, Newark, Staten Island and the North Jersey suburbs (ie. several million people), Newark is much more convenient than LGA or JFK. They’re supposedly tearing down Terminal A and rebuilding that over the next few years. Not sure how quickly it will get done.

  4. @Alpha, theyre building an entire new Terminal A which will result in the demolition of the existing one. They will need an entirely new airtrain to service it as the current one is dying

  5. The one thing I like about Spirit is they actually show the full breakdown of taxes that are part of your ticket. At some airports, it is interesting to see what you are actually paying for.

  6. NYC air traffic congestion and frequent related delays are big problem for all transit frequent flyers. The EWR is United hub, so most of this airline’s passengers only transit there. United does not need all these slots to serve NY-NJ-PA area. Why selecting NYC airport as a hub and keeping service and facility at a low comfort level? Terminal A is inconvenient and was discusting for a long time. Now renovated with additional gate and service center space, it is even more overcrowded. I pass through Terminal A and C every 2 weeks. Cleveland was more pleasant hub during the Continental merger period.

  7. UGH! So if this happens I see any airlines that fly to the NYC airfares will go up by this fuel surcharge. AA flies to EWR/LGA/JFK. I can’t see AA charging more for EWR and just not charging it across all NYC area flights. Thanks NJ legislature!

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