The airline industry is getting $1 billion in tax breaks per year from states on the jet fuel it buys, according to a new study funded by a national labor union.
In Illinois, two separate tax breaks on fuel amount to $85 million a year, said a study by the UNITE HERE International union to be released Tuesday. Nationwide, the tax breaks totaled an estimated $1 billion on 12 billion gallons of jet fuel bought, the study said. UNITE HERE said it represents 33,000 employees in the airport and airline industry.
"This is a lot of money states are giving away in tax breaks ... happening at the same time that airlines are saying they are actually overtaxed and are pushing for new tax breaks," said Adam Yalowitz, a union research analyst focused on airline tax policy and author of the study. "It's just a lot of money that taxpayers are losing out on."
The study is part of a new website, 12billion.org, to launch Tuesday.
Airlines for America, a trade group, said the industry helps create 11 million jobs and $1.5 trillion in economic activity.
"Our employees — and the largest labor unions — know that when the airline industry is financially healthy, they and our customers win because we can invest in benefits, training, planes and other customer amenities," said A4A spokeswoman Jean Medina. "No one wins when the industry, our customers and our employees are forced to shoulder higher taxes."
Airline taxes and fees amount to more than $60 on a $300 round-trip ticket, according to the trade group. Legislatively, it is pushing for a national bill that would allow airlines to prominently advertise fares without including government fees, saying this would highlight how much the industry is taxed. The bill has been roundly criticized by consumer advocates.
Airlines for America also filed a court action against the Transportation Security Administration, asking a U.S. appeals court to review a TSA fee hike that took effect last month, calling it an "unlawful TSA cash grab."
This is not the first time in Illinois that airlines have come under fire over fuel purchases.
The Regional Transportation Authority sued United Airlines and American Airlines for their jet fuel purchasing practices. Airlines were using what some describe as a loophole to buy jet fuel in virtually unoccupied satellite sales offices in areas with lower tax rates than in Chicago — where the airlines take delivery and use the fuel. In the most recent suit, against American Airlines, the RTA claims the practice cost it, Chicago and Cook County some $24 million in 2013.
The airlines have said the practice is lawful.