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Letter to Governor Bush on Airlines

The Honorable Jeb Bush
State of Florida
The Capitol, PL 05
Tallahassee, Florida 32399–0001

Dear Governor:

Associated Industries of Florida appreciates the time, energy, and consideration you have devoted to the multitude of issues that face this state as a result, both direct and indirect, of the September 11 attacks and the subsequent war on terrorism and terrorist states. You are serving us well.

On October 15, 2001, we forwarded a letter to you recommending several measures that we believe, based upon numerous detailed conversations with our national airline members, would be instrumental in getting both tourist and business travel restored to its previous levels in Florida. We understand that you have also had conversations with airline representatives endorsing our recommendations.

Principal among our recommendations is the abatement of the 6.9-cent per gallon aviation fuel tax to be effective immediately through July 1, 2003. We advocate this particular piece of the package because it sets in motion irrefutable math for the airlines. The abatement would immediately make it profitable for the airlines, per passenger, per mile, to reopen routes to Florida. As you are very aware, the airlines are operating under fundamental and urgent need to generate cash flow. Routes that are unprofitable are simply being eliminated. Routes that are profitable remain and are even being redoubled in some cases. Abating the aviation fuel tax would also place Florida’s routes on competitive footing with other states that are also currently working on similar incentive packages for the airlines.

As dictated by our democratic process, we have been diligently meeting with both the leadership and pivotal committee members in the House and Senate, building support for this and other pieces of the incentive package. We have received resistance on some fronts. Much of it is the result of certain airport managers that, regardless of the policy issue under consideration, see it as their chief responsibility to protect anticipated trust fund dollars – no matter what. In addition, some members have struggled with the notion of reducing the tax while concurrently cutting the state’s 2001-02 budget. Even though it is explained that the aviation fuel tax cut would involve trust fund dollars and not general revenue, concerns that the "local news" would not capture this budgetary nuance has created some hesitation. That being said, overall, the members are sympathetic, understand the necessity of providing some relief and are looking for a version of our recommendations they can readily support.

As we pointed out in our October 15 supporting documentation, Florida’s aviation fuel tax is the highest in the nation. In an effort to accommodate the concerns of the members, both political and practical, we would now recommend that the aviation fuel tax be reduced to 3.45-cent per gallon. While obviously, this is not the full abatement we originally requested, given the current high tax rate, halving the tax would be significant and would, in our estimation, have a very real and immediate impact. Simply halving the tax through July 1, 2003 has received a favorable response from key members in the House and Senate. Our airline members have stated that this would be a very, very positive step. Flight routes to Florida would immediately be effected by this reduction.

This adjusted recommendation we are advocating is largely due to our recognition that something simply has to be done. As we stated with no exaggeration in our October 15 missive, the very continued existence of some of our major airlines is at stake and they simply will not service routes that are unprofitable.

If you have any questions or would like to discuss this further in detail, please do not hesitate to contact us. We look forward to working with you in the days and weeks ahead to get Florida, "flying again."

Kindest personal regards.

Jon L. Shebel
President & Chief Executive Officer

cc: The Honorable Tom Feeney, Florida House of Representatives