Doppy: I agree that the primary reason most airlines are now on a death watch is the dearth of full-fare business travelers. (Well, that and their bloated cost structures.) Nobody really knows why they aren't flying. Could be the recession (but unemployment is still very low by modern historical standards).

Could be the 11 business fare hikes of 2000. Maybe those corporate travel dept. bean counters have curtailed high-priced travel in response.

Could be that full-fare travelers are afraid to fly (but I doubt very many are).

Who knows why? I agree that the extra $10 probably won't make a whit of difference to the full-fare passenger.

The extra $10 makes a hell of a lot of difference to discretionary discount travelers, however, such as families traveling on Southwest. If it didn't matter, don't you think WN would have already been collecting it as part of their fare?

I know that fares are extremely cheap right now. I also know (or at least trust the economists when they say) that increasing taxes on something (even air travel) usually results in consumers buying less of whatever it is. Sure, exceptions exist - those products and services where demand is inelastic.

I'm not sure that demand for air travel is inelastic. Otherwise, airlines would simply hike fares now to cover their revenue shortfalls and voila...no more negative cash flow.

Sure, the extra $10 won't by itself kill the airline industry. But it certainly won't help the industry recover. ECON 101 proves that statement. My inhouse PhD economist (my spouse) agrees with me.

Want to see demand take off? Repeal all taxes on air travel. Repeal the federal excise tax, the federal segment (anti-WN) tax and the newly enacted 9/11 Security Fee. We could even split part of the savings with the airlines (fares could go up some) and we'd all still be better off. Even if demand didn't increase. (Although demand would increase.)

And for all the airports crying the blues over decreased revenue? Cancel your $3.00 and $4.50 PFCs and see if that helps.

Well said, Bouncer and robvberg. If increasing airport security is such a matter of national importance, like national defense is, why should its costs be imposed only when one travels and not as part of the overall federal budget? I benefit from the US military but I don't have to pay any particular user fees for that benefit. I simply pay my federal taxes. I fail to see why useful (or useless, depending on your point of view) security enhancements are any different. In any event, the revenues from the $2.50/segment security fee are not going to cover even a small fraction of the expense - so why impose it? What possible benefit to our country results from that fee?

Even more ludicrous is the fact that with one hand, Congress gives airlines $5 Billion to help cover the losses flowing from the ground stop and lessened demand, while on the other hand, Congress raises taxes on what airlines sell. Huh?? Not all that different from the schizophrenic treatment of tobacco (subsidies to farmers, high taxes on smokes), except that tobacco demand is more inelastic than most consumer goods. Not too many tobacco companies reporting losses.

Usually when governments impose such specific taxes it's for one of the following two reasons:

1. Demand is inelastic and therefore it's bonus revenue for the feds - the thinking behind luxury taxes on expensive cars, boats, jewelry, etc. Government is not always right about this one; Remember how the luxury boat building industry tanked after the 1990 luxury tax was imposed? or

2. Government want to discouage demand for the "harmful product" - the thinking behind sin taxes on alcohol and tobacco.

Which reason is behind the ridiculous 9/11 Security Fee? Neither looks good to me.

I've done my part - I sent my Representative and Senators letters detailing the above and asked them to reconsider the flawed reasoning behind the security fee. I'll post if I get anything other than a form "thanks for your letter" response.

Let's hope the airline industry can recover despite airport security that too closely resembles prison lockdowns.