Aviation Fuel Excise Tax

From:         aircargo@concentric.net
Date:         Fri, 10 Jan 1997 04:21:00 GMT
Organization: misc.transport.air-industry.cargo
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For the second year, the federal excise tax on aviation fuels has
expired. This is _not_ the tax on tickets discussed in an earlier post
and only applies to Jet A and Avgas fuel.

As a small air carrier as well as director for a medium-volume FBO, I
see the expiration on a number of fronts:

 As an air carrier, despite any grandiose plans big brother may have
for my tax $, I see the 15.5 cents/gallon for avgas and 18.5
cents/gallon for Jet A as a major cost savings to my operations.

As an FBO, I can either pass the savings on (as I did last year) to my
base customers, ramp customers, both, or neither. This will depend on
the market practices of my peers in this region as well as the
expedience of congress to reinstate the tax. Although last year it was
not reimplemented until fall, it is widely expected that this year
change will come much sooner.  The base price for Jet has risen 15
cents in 1996 and I've watched Avgas rise 10 cents as well...and this
is aside from any monkeying with the excise tax.

A great deal of our FBO activity is with the scheduled airlines as
well as Mobile Aerospace and Engineering - a heavy maintenance
facility here in Mobile, Alabama. While my control is limited to
flowage fees, I am keeping a watchful eye to my supplier. If last year
is any indication as to the reaction of the airlines, it is obvious
that they have a short memory. As soon as their base cost for fuel
returns to its pre-December level then they will have gotten used to
the savings - and start pushing for savings anywhere they think they
have influence...namely flowage fees.

Finally I see it as a follower of industry trends and moderator of
this newsgroup. I remember too well the increased cost of up to 10
cents/lb. for forwarders on cargo in the form of a "fuel tax". I can't
help but feel that a savings - even temporarily - of 18.5 cents/gallon
to the major carriers should be passed on to the forwarders. perhaps
in the form of relief from the airline's self imposed fuel tax. Ahhh,
but would the forwarders pass it along to *their* customers?

Don't get me wrong, I realize the bottom line for all of us is profit
whether you are a shipper, forwarder, airline, or FBO. But UPS just
raised their costs 3.6% and Fed-Ex claims that operating costs negate
any savings they could pass on to their customers. (This is with a
posted net profit of $90 million in 1996.)

Perhaps my friends over at sci.aeronautics.airliners could do the fuel
consumption calculations and project the potential savings in
operational cost that would occur should this thing continue until
August as it did last year.


   Michal Douglas <aircargo@concentric.net>
 Usenet Moderator for the Air Cargo Newsgroup