United Airlines is considering scrapping its Newark hub. The decision comes after New Jersey lawmakers are proposing to raise Newark Airport taxes by $20m. The sting comes that this raise in taxes would exclusively hit United Airlines.
State lawmakers are proposing to raise taxes to finance an extension for the PATH Train. The extension would add Newark Liberty International Airport to the train network.
The increase in taxes would be down to the way that fuel taxes are handled by the state. Currently the state only taxes the fuel used during taxi, takeoff, landing, and while flying through New Jersey airspace. This means that the state only sees a fraction of taxes related to flights which travel thousands of miles. The increase in taxes, would see airlines pay four cents per gallon of fuel purchased in New Jersey.
Only For United Airlines
While the tax doesn’t specifically mention United Airlines, it would affect airlines which carry 8 million passengers or more per year. Currently only United Airlines meets this criteria in the state of New Jersey. This all means that whether or not the tax has United Airlines in mind, it is exclusively targeting the airline.
United Says Unlawful
United is claiming that the increase in taxes would be unlawful. The Federal Aviation Administration’s guidelines say that jet fuel taxes can only be used for aviation purposes. Jill Kaplan, who is United Airlines’ president for New York and New Jersey, warned lawmakers “So we have choices as to where we will grow. And if this additional and discriminatory tax scheme becomes law, it is my profound concern that this will impact our ability and stunt our ability to invest in future investments at Newark and in turn New Jersey.”
United Airlines is one of the largest employers in New Jersey. The airline employs 14,000 workers in the state. In addition it has invested more that $2 billion in Newark Airport since the year 2000. Just this month the airline commented that it would investing $200m in Hawaiian airports. It is also in the process of launching flights from Newark to Naples and Prague. With this in mind, it seems counter intuitive for the state to single out United Airlines. It would surely be far more reasonable to ask the airline to work with them. If the tax is enacted, United Airlines could look at moving a bulk of their operations to a different airport. This move would severely impact the airport, effectively rendering the tax change pointless, and losing out of a lot of the business which the airline currently brings to the airport.
Cheaper Flights From Philadelphia
Speaking about the proposed increase in taxes, New York State Senator Bob Singer was particularly vocal. Senator Singer is a Lakewood Republican. He commented that fares would increase if taxes increase. “From where I am in Jersey, it’s just as close to go to Philadelphia Airport as it comes to Newark. If it’s going to cost me more to go to Newark than Philadelphia, I’m going to go to Philadelphia.”
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