United Could Move ‘the Bulk’ of its Operations from Newark if Jet Fuel Tax Increases
Sep 17, 2018, 8:23 am
#46
Join Date: Apr 2016
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This is a dramatically unfair tax and I'm certain DL, AA, and B6 would love it if it were to be enacted into law. If it is, management will figure out some way to split United into four airlines (like Swiss does with Swiss International vs. Swiss Global).
Only in New Jersey does adding an extra tax that only applies to your biggest customer make sense.
Only in New Jersey does adding an extra tax that only applies to your biggest customer make sense.
Sep 17, 2018, 8:25 am
#47
Join Date: Mar 2015
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They could just pick up and move to PHL and buy up AA's gates there. Then they can laugh across the river back at the people in Trenton who imposed the tax 
(PHL is possibly the only airport WORSE than EWR)
EWR should run a new marketing campaign...
"EWR, hey at least we are not PHL"
This is a terrible bluff. Its like trying to bluff with a pair of 2's and the dealer has 4 aces
(PHL is possibly the only airport WORSE than EWR)EWR should run a new marketing campaign...
"EWR, hey at least we are not PHL"
This is a terrible bluff. Its like trying to bluff with a pair of 2's and the dealer has 4 aces
Off topic - having flown through both PHL and EWR, I will take PHL over EWR any day.
Sep 17, 2018, 10:09 am
#48
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I will NEVER understand why local and state governments go after the biggest businesses within their borders all the time. These are the companies that are driving lots of jobs to your state/local area and you punish them for this
Sep 17, 2018, 10:12 am
#49
Join Date: Apr 2004
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I can’t imagine UA ever leaving EWR. Sure, if your final destination is Manhattan, LGA or JFK are fairly equivalent travel time, but EWR is a fortress hub for the North Jersey market. Over 6 million residents, a lot of wealth, and a lot of business travelers who don’t even consider JFK, LGA and PHL to be viable alternatives.
If the fuel tax becomes law, UA will just suck it up and pass it along in fare increases for EWR O&D pax. They already have a pricing premium vs. DL and AA out of NYC on many domestic routes, probably in part because the North Jersey market is so captive to EWR.
If the fuel tax becomes law, UA will just suck it up and pass it along in fare increases for EWR O&D pax. They already have a pricing premium vs. DL and AA out of NYC on many domestic routes, probably in part because the North Jersey market is so captive to EWR.
Sep 17, 2018, 10:25 am
#50
Join Date: Feb 2008
Programs: 6 year GS, now 2MM Jeff-ugee, *wood LTPlt, SkyPeso PLT
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New Jersey is seemingly targetting United with a four cent per gallon tax on all jet fuel purchased in the state - but one that is only applicable to a carrier with passenger traffic of 8 million people or more p.a.
As a result, the UA exec for the region said the airline might consider moving "the bulk" of its operations to other hubs.
Didn't something similar just happen in Georgia with Delta?
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As a result, the UA exec for the region said the airline might consider moving "the bulk" of its operations to other hubs.
Didn't something similar just happen in Georgia with Delta?
.
I am though interested in what is behind this? I could speculate that given UA's long term market gouging ex-EWR, and its low service and product quality, that taxing the near monopoly provider at EWR might be politically beneficial (if it opened up space for competitors to come in, lower fares). I certainly think that UA threatening to leave is silly, no one will take that seriously. Just curious what is behind the bill?
Sep 17, 2018, 11:16 am
#52
Join Date: Feb 2008
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Planes often don't fuel at outstations on short turns, but the extra cost of carrying the extra weight of carrying extra fuel to avoid paying a 4 cent/gallon tax would cost far more than the 4 cents one would save. On longer flights, its impossible to carry the fuel in any event.
And to those who think the extra cost is a killer, there are already major differences in fuel costs by region, far more than 4 cents. AirNav: Fuel Price Report Given the higher fuel costs in the NY area, if 4 cents/gallon actually mattered, UA would have bailed on the NY region long ago.
And to those who think the extra cost is a killer, there are already major differences in fuel costs by region, far more than 4 cents. AirNav: Fuel Price Report Given the higher fuel costs in the NY area, if 4 cents/gallon actually mattered, UA would have bailed on the NY region long ago.
Sep 17, 2018, 11:27 am
#53
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Join Date: Nov 2004
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My travel plans don't often take me to LAX, so can't comment. There is one grumpy lounge ticket person at SFO who's mission in life seems to be to avoid doing anything at all, but he's compensated by the other agent who worked with me for 45 minutes to make a complex travel waiver flight change for me. ORD is my home base, so guess I don't think about it, but at least you can get to your gate faster than you can at EWR.
Sep 17, 2018, 11:49 am
#54
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Join Date: Jul 2003
Posts: 23,021
As with most government money grabs, there is a risk that NJ could wind up losing tax revenue by raising taxes on UA, even if UA stays as it is.
Since planes don't refuel before each flight, UA could implement a "Don't refuel at EWR" policy... manage fuel purchases on short-haul flights and refuel/top up only at cheaper tax out of state airports (assuming other taxes are lower than NJ) instead of at EWR. Obviously, that wouldn't work on long hauls but a 20% decrease in EWR fuel purchases would offset revenue gained from the tax increase. Presumably, fuel suppliers would lay off NJ staff if demand is cut further cutting state tax revenues.
Here's an idea NJ and every other state and local government, cut your crazy state employee pensions.
Since planes don't refuel before each flight, UA could implement a "Don't refuel at EWR" policy... manage fuel purchases on short-haul flights and refuel/top up only at cheaper tax out of state airports (assuming other taxes are lower than NJ) instead of at EWR. Obviously, that wouldn't work on long hauls but a 20% decrease in EWR fuel purchases would offset revenue gained from the tax increase. Presumably, fuel suppliers would lay off NJ staff if demand is cut further cutting state tax revenues.
Here's an idea NJ and every other state and local government, cut your crazy state employee pensions.
Sep 17, 2018, 1:13 pm
#55
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Sep 17, 2018, 2:49 pm
#57
Join Date: Mar 2018
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I can't imagine they would do such a thing over a measly $.04/gallon tax. Note that UA has hubs in the highest two states for aviation fuel taxes -- IL (ORD) at $.328/gallon, and CA (SFO/LAX) at $.27/gallon. NJ is currently one of the lowest at $.004/gallon. It's got a long way to go before it gets anywhere near IL and CA levels. If it's such a big deal, why did DL keep the DTW hub ($.219/gallon) over the CVG hub ($.034/gallon)?
Sep 17, 2018, 3:16 pm
#58
Join Date: May 2015
Posts: 674
Isn't United like 70% of EWR? It makes perfect sense to use taxes to encourage more competition so NJ residents have more options. The current situaiton is good for United and garbage for NJ residents, who are the ones who vote.
Sep 17, 2018, 4:08 pm
#59
Join Date: Feb 2001
Location: NYC
Programs: UA MileagePlus 2MM
Posts: 1,567
This is a dramatically unfair tax and I'm certain DL, AA, and B6 would love it if it were to be enacted into law. If it is, management will figure out some way to split United into four airlines (like Swiss does with Swiss International vs. Swiss Global).
Only in New Jersey does adding an extra tax that only applies to your biggest customer make sense.
Only in New Jersey does adding an extra tax that only applies to your biggest customer make sense.
I suspect that this was a temporary tax rebate for United that is being rescinded. Seems unfair if it just applies to United because they 'own' EWR, but regardless whatever the outcome UA has no place to go to replace EWR in the NYC Tri-State area.
Questions:
1. What is the fixed cost amount to UA if this goes through?
2. Could this be revenge by Samson/Smisek by loyalists?
Observations
In the end, agree, UA is not leaving EWR in any meaningful way. UA flies more pax into NYC via EWR/JFK/LGA than Delta, their next closest rival. NJ politics very corrupt!
Adam
Last edited by adambrau; Sep 17, 2018 at 4:15 pm
Sep 17, 2018, 5:02 pm
#60
Join Date: Mar 2018
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No different than airport that waive landing fees for new airlines and provide other incentives for competition.
Isn't United like 70% of EWR? It makes perfect sense to use taxes to encourage more competition so NJ residents have more options. The current situation is good for United and garbage for NJ residents, who are the ones who vote.
Isn't United like 70% of EWR? It makes perfect sense to use taxes to encourage more competition so NJ residents have more options. The current situation is good for United and garbage for NJ residents, who are the ones who vote.
This is nothing more than the NJ state govt strong arming UA, as they know UA has the weaker hand. If they genuinely cared about increasing revenue (which is the claim) they'd write a law that would levy taxes fair across the board. Not write a law that discriminates.