Quick – Buy a Plane Ticket!

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If there’s air travel in your future, now might be the time to book your flight.

That’s because as of midnight Friday, the FAA has no authority to collect the nearly $200 million it takes in each week by taxing airline tickets. According to the Air Transport Association, federal taxes add about $60, or 25 percent, to a typical $240 round-trip fare. Only about half of these taxes will go uncollected: According to this article in the Washington Post, taxes on a one-stop flight from Peoria, Ill to Raleigh, N.C. would fall from $60.74 to $28.

The FAA’s inability to collect federal taxes stems from a familiar source: the inability of an ultra-partisan Congress to agree on virtually anything.

The FAA’s authority to operate originally expired in 2007 when Congress couldn’t agree on long-term funding for the agency. Since then, however, the agency continued operating via 20 funding extensions, all of which were routinely passed by Congress.

But these days nothing’s routine. In the bill granting the latest extension, house republicans added two provisions: one that would make it harder for airline and railroad workers to unionize, and another eliminating $16 million in subsidies for 13 rural airports. Senate Democrats say these provisions won’t fly.

Result? No extension of the FAA’s authority or funding. Which means as of midnight Friday, July 22, the FAA can’t collect some federal ticket taxes. In addition, about 4,000 of its 47,000 workers have been furloughed and billions in airport construction projects have been frozen. Since air traffic controllers and other essential workers aren’t immediately affected, the only noticeable change to consumers – at least in the short term – should be cheaper ticket prices. If the agency be forced to operate without funding for weeks, however, essential air traffic support and services will ultimately be grounded.

In a press release on Friday, July 22, Transportation Secretary Ray LaHood said, “I’m very disappointed that Congress adjourned today without passing a clean extension of the FAA bill. Because of their inaction, states and airports won’t be able to work on their construction projects, and too many people will have to go without a paycheck. This is no way to run the best aviation system in the world.”

Airlines grab savings

Unfortunately, however, by Saturday night many airlines raised ticket prices by the amount of the tax savings, essentially grabbing the money for themselves.

According to this article from the Associated Press, most major U.S. airlines kept prices the same by raising the cost of tickets by the amount of tax savings. American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue all raised fares, while Virgin America, Frontier Airlines and Alaska Airlines allowed the tax savings to flow through to the consumer.

It’s unlikely the impasse will last long, so if you have plans to travel anytime soon – and can travel on any of the few airlines that didn’t raise prices – check out a few ticket sites and see if you can save a buck or two. But before you do, see 7 Steps to Lower Airfares.

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Comments & discussion

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  • Anonymous

    In today’s news, the airlines are RAISING the price of a ticket to offset the loss of government taxes.  Seems like a rip-off to me!  Stealing from the government via the consumer.