Airline Ticket Taxes Become Issue with FAA Non-Funding
Published: Feb 8, 2012
A funny thing happened on the airlines’ way to the tax collector: The tax man for the airlines stopped collecting taxes.
On July 22, 2011, after Congress failed to reauthorize spending for the Federal Aviation Administration, the federal government also lost the authority to collect some $25 million a day in a wide variety of ticket and cargo taxes.
These taxes are collected into what’s known as the Airport and Airways Trust Fund, which helps in many ways to fund not just the normal everyday workings of the air transportation system, but also longer-term improvements to the nation’s airports and air traffic control system. So, that means that monies for critical jobs such as air traffic controllers are, at least for now, coming from the federal government’s general fund. And we already know what great shape that is in.
Interestingly, some airlines, such as low-cost carriers Spirit Airlines and Alaska Airlines, are saying they are trying their best to pass on these savings from tax relief to their customers, but before you know it, the air-fare system will re-balance itself, and whether truly saving money or not, it will be difficult to tie these savings to individual reductions in air fares.
Unbelievably, some of the same network carriers that have railed against high ticket taxes in the past instead tried to raise fares which, if nothing else, was a very stupid public relations move. Although an Air Transport Association spokesman claimed that the general effect of the fare moves was to keep them the same, it still represents a potential windfall to the largest U.S. carriers – something that in actuality is necessary for the airlines to begin earning money again in this era of generally increased oil prices once again.
The main federal taxes that expired are the 7.5 percent excise charge on all domestic tickets, the $3.70 federal charge per U.S. domestic segment, and the $16.30 tax on each international arrival and departure. The FAA will not be able to collect these taxes until Congress authorizes their budget once again.
A recent study by American Express Global Business Travel discovered that the average domestic fare paid by clients was 7.5 percent higher this May than in May 2010.
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by Jim Brown , Reporter for HelloFlight.com
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