United Could Move ‘the Bulk’ of its Operations from Newark if Jet Fuel Tax Increases
#77
Join Date: Jan 2017
Posts: 352
Looks like the "United tax" was approved by NJ state lawmakers.
https://www.bloomberg.com/news/artic...-train-service
https://www.bloomberg.com/news/artic...-train-service
#79
A FlyerTalk Posting Legend
Join Date: Apr 2004
Location: GVA (Greater Vancouver Area)
Programs: DREAD Gold; UA 1.035MM; Bonvoy Au-197; PCC Elite+; CCC Elite+; MSC C-12; CWC Au-197; WoH Dis
Posts: 52,125
#80
Join Date: Dec 2008
Location: Chicago IL US
Programs: UA 1K; National Executive Elite; Hertz PC & Hotels Galore
Posts: 946
Looks like the "United tax" was approved by NJ state lawmakers.
https://www.bloomberg.com/news/artic...-train-service
https://www.bloomberg.com/news/artic...-train-service
New Jersey lawmakers gave preliminary approval ..... The bill must be passed by the legislature and signed by the governor to become law.
#81
FlyerTalk Evangelist
Join Date: Oct 2006
Location: SFO/SJC
Programs: UA Silver, Marriott Gold, Hilton Gold
Posts: 14,882
yup - sounds like me that all it did was make it out of committee. Much different than it becoming law.
My my guess is UA will be lobbying hard to keep this from passing. Have no idea the political situation, but given the amount of jobs and economic activity they contribute to in the state, both directly and through other vendors that serve them (caterer/flight kitchen, airport support staff, etc.), they likely have a lot of lobbying leverage they can use. They can’t pull out of EWR, of course, but they could legitimately move a chunk of flights/business to other hubs - particularly IAD, that would be enough to worry the state.
I’d also guess that they are ready to threaten a lawsuit if they think it would help their case, and regardless of if they threaten, they probably should file one of it passes.
On another note, I’m still trying to figure out why NJ would want to pick a fight with one of its largest employers and the engine of how many millions or more of dollars a year in economic benefit to the State. Why would the state not make it easy and just apply this to all airlines? What is the downside to applying it to all. Did UA do something to make NJ mad? Is NJ trying to force UA concessions on something else?
and why should UA alone pay the costs needed for the PATH extension? Shouldn’t that be borne by all airlines or travelers? Or will the extension to EWR only be open to UA travellers - seems reasonable to me if they are the only ones paying into it?
My my guess is UA will be lobbying hard to keep this from passing. Have no idea the political situation, but given the amount of jobs and economic activity they contribute to in the state, both directly and through other vendors that serve them (caterer/flight kitchen, airport support staff, etc.), they likely have a lot of lobbying leverage they can use. They can’t pull out of EWR, of course, but they could legitimately move a chunk of flights/business to other hubs - particularly IAD, that would be enough to worry the state.
I’d also guess that they are ready to threaten a lawsuit if they think it would help their case, and regardless of if they threaten, they probably should file one of it passes.
On another note, I’m still trying to figure out why NJ would want to pick a fight with one of its largest employers and the engine of how many millions or more of dollars a year in economic benefit to the State. Why would the state not make it easy and just apply this to all airlines? What is the downside to applying it to all. Did UA do something to make NJ mad? Is NJ trying to force UA concessions on something else?
and why should UA alone pay the costs needed for the PATH extension? Shouldn’t that be borne by all airlines or travelers? Or will the extension to EWR only be open to UA travellers - seems reasonable to me if they are the only ones paying into it?
#82
Join Date: May 2015
Posts: 674
Because they were the ones using bribes to get it. Chairman's flight + AC service. It was obvious that the extended PATH was part of why the left JFK, since they could market a "direct" train from Wall Street and midtown.
The thing is, NJ legislatures represent ALL NJ residents.
The average NJ resident flies maybe once or twice a year. They value price first. United using EWR as a fort does not help the average NJ resident. If United does pull flights - creating more room for Jetblue, Southwest, Spirit, Frontier, etc, you might lose out, but the greater NJ public benefits.
And remember, at the end of the day, this would just even out the law to be the same as pretty much every other state.
The average NJ resident flies maybe once or twice a year. They value price first. United using EWR as a fort does not help the average NJ resident. If United does pull flights - creating more room for Jetblue, Southwest, Spirit, Frontier, etc, you might lose out, but the greater NJ public benefits.
And remember, at the end of the day, this would just even out the law to be the same as pretty much every other state.
#83
A FlyerTalk Posting Legend
Join Date: Apr 2004
Location: GVA (Greater Vancouver Area)
Programs: DREAD Gold; UA 1.035MM; Bonvoy Au-197; PCC Elite+; CCC Elite+; MSC C-12; CWC Au-197; WoH Dis
Posts: 52,125
#84
Join Date: Sep 2013
Location: East Coast, USA
Posts: 1,032
The thing is, NJ legislatures represent ALL NJ residents.
The average NJ resident flies maybe once or twice a year. They value price first. United using EWR as a fort does not help the average NJ resident. If United does pull flights - creating more room for Jetblue, Southwest, Spirit, Frontier, etc, you might lose out, but the greater NJ public benefits.
And remember, at the end of the day, this would just even out the law to be the same as pretty much every other state.
The average NJ resident flies maybe once or twice a year. They value price first. United using EWR as a fort does not help the average NJ resident. If United does pull flights - creating more room for Jetblue, Southwest, Spirit, Frontier, etc, you might lose out, but the greater NJ public benefits.
And remember, at the end of the day, this would just even out the law to be the same as pretty much every other state.
https://www.faa.gov/about/office_org...dministration/
Maybe WN thinks they can pull off BWI again (when they swooped in after US dehubbed BWI).
#85
Join Date: Jan 2017
Posts: 352
I read the article. It sounds very likely to pass the legislature and be signed into law.
As to the legality, this seems more questionable:
https://www.nj.com/opinion/index.ssf...foolhardy.html
New Jersey’s Democratic-controlled legislature in June approved a $37.4 billion budget that raised or placed new taxes on corporations, those with incomes exceeding $5 million and companies that provide car-sharing services and liquid nicotine. Governor Phil Murphy, a Democrat who took office in January, signed the budget.
https://www.nj.com/opinion/index.ssf...foolhardy.html
Federal law dictates that revenue generated on certain airports like Newark International including aviation fuel tax revenue must remain on the airport and be used for aviation purposes. Enforcement of this requirement has been a particular focus of the Federal Aviation Administration in recent years in light of the age-old temptation to take airport revenue "downtown" for purposes unrelated to aviation.
#86
Join Date: May 2010
Location: AVP & PEK
Programs: UA 1K 1.8MM
Posts: 6,335
#87
Join Date: May 2005
Location: Dulles, VA
Programs: UA Life Gold, Marriott Life Titanium
Posts: 2,757
United doesn't fly out of JFK, so I seriously doubt they will move anything from Newark to there.
Regarding Dulles, plenty of people in Montgomery Co use it. National isn't really much closer as you come across the American Legion bridge from Maryland, and with the perimeter restrictions, National isn't the best airport for a lot of flyers. Plus all of the international flights are at Dulles. BWI still has fairly limited international options, and is much farther away than Dulles for a lot of Mont. Co residents. As far as Fairfax Co, a large percentage of jobs are in the Tysons-Reston corridor, and that area is much easier to fly in and out of Dulles than National.
Dulles would be an excellent spot for an expanded hub. Four runways, with three in a good side-by-side setup. There is plenty of room to build up to two 48-gate terminals. Also, being a few hundred miles farther south, Dulles is a better spot for North-South traffic up and down the East Coast than Newark. There are very few ground traffic delays at Dulles, if there are delays its either weather or ATC departure delays. At Newark, it's common to spend a half hour to an hour on the tarmac waiting in line for a departure slot.
Regarding Dulles, plenty of people in Montgomery Co use it. National isn't really much closer as you come across the American Legion bridge from Maryland, and with the perimeter restrictions, National isn't the best airport for a lot of flyers. Plus all of the international flights are at Dulles. BWI still has fairly limited international options, and is much farther away than Dulles for a lot of Mont. Co residents. As far as Fairfax Co, a large percentage of jobs are in the Tysons-Reston corridor, and that area is much easier to fly in and out of Dulles than National.
Dulles would be an excellent spot for an expanded hub. Four runways, with three in a good side-by-side setup. There is plenty of room to build up to two 48-gate terminals. Also, being a few hundred miles farther south, Dulles is a better spot for North-South traffic up and down the East Coast than Newark. There are very few ground traffic delays at Dulles, if there are delays its either weather or ATC departure delays. At Newark, it's common to spend a half hour to an hour on the tarmac waiting in line for a departure slot.
#88
FlyerTalk Evangelist
Join Date: Oct 2006
Location: SFO/SJC
Programs: UA Silver, Marriott Gold, Hilton Gold
Posts: 14,882
Georgia has DL pay more taxes on fuel (in relative terms, of course) than AA because of its mega-hub at ATL? N. Carolina taxes AA higher than B6 because if their position at CLT? Can you please cite a specific example. Dominant carriers will pay more because of their larger operations in a given place, of course, but usually they all pay tax on an equal footing - not you pay taxes based on your serving X million pax a year, but I don’t because I don’t serve X million passengers. That’s what they call discrimination (outside of government, of course, it’s usually the other way, with a discount for buying in volume).
If the train is going to benefit all carriers at the airport (which in the end, it will), then it should be applied to the carrier based on their share of flights (which it essentially would if the exemption was lifted for all carriers). Or just charge a surcharge fare to leave at the station, which is essentially the way it works with NJ Transit - you pay that extra in the fare to the airport.
If I’m going to pay higher fares to EWR because UA has to account for a larger tax bill (relatively, of course) compared to say, DL, then I’d expect riders to the airport should be required to show a UA ticket to access the train to the airport - or more realistically, to have a far lower fare - Those riders showing a UA ticket for that day can ride for 15% (for example) of fare that a non-flyer or DL Flyer has to pay. I realize that ain’t gonna happen, but that’s the way it should if it goes on like this.
My my guess is if this passes, it’s not going to be the end of the story.
#89
Join Date: May 2015
Posts: 674
NJ will be matching how other states tax, but provide a fee reduction to carriers with lower presence in NJ, perhaps as an incentive to operate more service in the state. No different than a state luring Amazon with 1 billion in tax reductions that are not available to anybody else.
If the train is going to benefit all carriers at the airport (which in the end, it will), then it should be applied to the carrier based on their share of flights (which it essentially would if the exemption was lifted for all carriers). Or just charge a surcharge fare to leave at the station, which is essentially the way it works with NJ Transit - you pay that extra in the fare to the airport.
United can try and raise prices by 10%. But if nobody matches, they either fly out with emptier planes, or they return to a more competetive price.
#90
Join Date: Jul 2014
Location: Rowley, MA / Edgartown, MA / Christiansted, St. Croix (USVI)
Programs: UA LT GS/4.96MM, Marriott LT Titanium, IHG Platinum, Global Entry, TSA Pre✓, Korea SeS, APEC
Posts: 579
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 situaiton 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 situaiton is good for United and garbage for NJ residents, who are the ones who vote.
Last edited by John Aldeborgh; Sep 25, 2018 at 6:15 pm