"FAA funding stalemate means savings on plane tickets"

Friday, July 22, 2011

Funding stalemate means savings on plane tickets
Starting Friday at midnight, airlines will not have the authority to collect
federal excise ticket taxes because Congress failed to approve an FAA
funding measure.
By KRISTIN JACKSON
The Seattle (WA) Times
 

Congress has left the Federal Aviation Administration (FAA) in limbo - and
that will save buyers of airline tickets some money because they won't have
to pay federal taxes on tickets.

Starting Friday at midnight, airlines will not have the authority to collect
federal excise ticket taxes because Congress failed to approve an FAA
funding measure.

Seattle-based Alaska Airlines estimates travelers could save 14 percent on
some tickets. And, said Alaska spokeswoman Bobbie Egan, the federal taxes
will not apply retroactively. However, whenever Congress passes a stopgap
funding measure for the FAA, the taxes will resume.

Taxes that won't be collected by Alaska (and other airlines) include:

   . The 7.5 percent tax generally applicable to domestic transportation.

   . A $16.30 international arrival/departure tax each way (for flights to
Canada, Mexico or other foreign destinations).

   . The $3.70 domestic segment tax.

   . The $8.20 departure tax for flights between Alaska/Hawaii and the
mainland U.S.

Some other taxes and fees, including the Sept. 11 security fee, still will
be collected.

Nearly 4,000 FAA workers face furloughs because of the funding stalemate,
but the U.S. air-traffic control system will not be affected, officials
said.

Obama administration officials have said the shutdown will not affect air
safety. Air traffic controllers will remain on the job. But airlines will
lose the authority to collect about $200 million a week in ticket taxes that
go into a trust fund that pays for FAA programs.

FAA employees whose jobs are paid for with trust fund money will be
furloughed, including nearly 1,000 workers at the agency's headquarters in
Washington, 647 workers at FAA's technology and research center in Atlantic
City, N.J., and 124 workers at the agency's training center in Oklahoma
City.

"These are real people with families who do not deserve to be put out of
work during these tough economic times," FAA Administrator Randy Babbitt
said in a statement.

Passengers who bought their tickets before the shutdown, but who travel
during the tax suspension, may wind up due a refund, Treasury Department
spokeswoman Sandra Salstrom said. That's because it's not clear whether the
government can keep taxes for travel that takes place during a period the
government doesn't have authority to collect taxes, she said.

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