The FAA gets dissed.
Since politicians were not able to come to an agreement over extending the operating authority of the FAA as of midnight tonight, about 4,000 people will be out of work and federal airline ticket tax will no longer be collected. The shutdown will not affect airline safety, but it will stop airlines from collecting about $200million per week in ticket taxes that would help to to fund FAA programs. In the short term, passengers might celebrate since they will be able to save money by not paying taxes, but this means that projects will be delayed and costs might end up being higher in the long run.
At this time it seems unclear exactly how this partial shutdown will affect the airline industry. Although confusing, I am willing to bet that Spirit Airlines will come up with some fancy advertising campaign about the FAA shutdown. Although I normally celebrate an airline’s unique advertising campaign, it seems odd to celebrate a failure in politics, which will end up hurting airline-related projects, but I am sure it will happen.
Update 1: looks like Virgin America jumped on the tax-themed sale already.
Update 2: Boeing confirmed via email to AirlineReporter.com that 787 Dreamliner and 747-8 certifications will not be affected by the FAA partial shut down.
Update 3: Alaska Airlines is also advertising (see screen shot) lower fares from the FAA partial shut down on their homepage. Still nothing from Spirit Airlines — guess I was way off on that one.
Here is the direct copy and paste of the FAA’s press release as well as some information from Alaska Airlines how these changes will change their fares…
From the official FAA Press release:
Transportation Secretary Ray LaHood and FAA Administrator Randy Babbitt expressed disappointment today after Congress adjourned for the week without passing a clean FAA reauthorization extension. Because of Congress’ inaction, many states will have to bear a significant economic burden and many airport projects will be halted.
’œI’m very disappointed that Congress adjourned today without passing a clean extension of the FAA bill,’ said Secretary LaHood. ’œBecause 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.’
The current FAA reauthorization expires at midnight tonight, Friday, July 22, 2011. Congress has extended the FAA’s authorization 20 separate times without controversy. Without an extension, the FAA will be forced to furlough nearly 4,000 employees and will be unable to move forward on important airport construction projects and other critical airport activities.
While this lapse in FAA’s authorization affects thousands of public and private sector jobs, it is important to note that the safety of the flying public will not be compromised.
’œThe FAA employees who will be furloughed perform critical work for our nation’s aviation system and our economy,’ said FAA Administrator Babbitt. ’œThese are real people with families who do not deserve to be put out of work during these tough economic times.’
The Airport Improvement Program has already stopped processing new airport grants in anticipation of a furlough. The program, which provides construction project grants to airports, will be shut down and unable to provide roughly $2.5 billion for airport projects in all 50 states that could put thousands of people to work in good paying jobs.
For example:
* Orlando International Airport in Orlando, Florida is still waiting on funding to rehabilitate a major taxiway
* St. Petersburg-Clearwater International Airport in St. Petersburg-Clearwater, Florida is still waiting on funding to rehabilitate Runway 04/22
* Cambridge Municipal Airport in Cambridge, Ohio is still waiting on funding to acquire snow removal equipment and conduct a survey to develop an instrument approach procedure
* Houghton County Memorial Airport in Hancock, Michigan is still waiting on funding to modify their terminal building and discourage wildlife from entering the active airfield
* Richmond International Airport in Richmond, Virginia is still waiting on funding to proceed with construction of a new apron for terminal concourse A
* Henderson City-County Airport in Henderson, Kentucky is still waiting on funding to rehabilitate Runway 09/27
* Clovis Municipal Airport in Clovis, New Mexico is still waiting on funding to relocate the localizer equipment due to a runway extension construction. This equipment is out of service on the main runway until the project can proceed
* Lubbock International Airport in Lubbock, Texas is still waiting on funding to begin the third phase of a critical runway rehabilitation
* Adams Field in Little Rock, Arkansas is still waiting on funding to begin the rehabilitation of taxiway lighting, construction of a Runway Safety Area, and the installation of Precision Approach Path Indicator
Additionally, the FAA will be forced to withhold money for states and individual airports as a result of the lapse in authorization. For example, Florida airports will not have access to over $40 million in funding and the state of California cannot use nearly $38 million. The FAA also cannot give the state of Ohio over $10 million in airport grant money or the state of Virginia over $16 million for which they are eligible.
Up to 4,000 FAA employees in 35 states, the District of Columbia and Puerto Rico will be furloughed and forced to go without pay. Large numbers of employees in New Jersey, New York, California, Georgia, Oklahoma, Texas, Washington, Illinois and the District of Columbia will be affected. This includes many of FAA’s engineers, scientists, research analysts, administrative assistants, computer specialists, program managers and analysts, environmental protection specialists, and community planners.
Specific Details from Alaska Airlines:
For tickets sold on alaskaair.com starting 12 a.m., Saturday, July 23, 2011, the following taxes will not be collected until congress votes to reinstate them:
* The 7.5% tax generally applicable to domestic transportation (as well the7.5% tax on amounts received from the sale of ’œfrequent flier miles’.)
* The $3.70 domestic segment tax.
* The $16.30 international arrival/departure tax.
* The $8.20 departure tax for flights between Alaska/Hawaii and the mainland US.
For example, on Alaska this represents a savings of approximately $44 off a $300 roundtrip ticket, or about 14 percent. All other taxes and fees will continue to apply.
I wonder if this is going to stop work on extending a runway here in San Antonio.. probably will. Runway 3/21 here at SAT has been closed for about 3 months now to extend it another 1000ft. Normally the winds come from the SE so it hasnt really be a problem but at times it would help with departures.
Some airlines have actually increased fares in the wake of the tax holiday so new prices (with less taxes) are the same as old ones (with more). Southwest, US Airways and AMerican are guilty of this at least.
In contrast, Delta, JetBlue, Frontier, Virgin America, Alaska and United are keeping their usual fares, so the lack of taxes actually represents a discount on their flights.
I’ll probably be booking some trips before the taxes get reinstated. $142 for a DEN-SAT roundtrip sure beats $160, and my Thanksgiving flight appears to be $50 or more cheaper than when I checked just a few days ago, partially due to the involuntary tax cut.
One thought about the various FAA airport rehab projects: why can’t airports use gate (and other) fees, or PFCs, to get the revenue they need for projects, rather than relying on the FAA to do work at a national (less efficient) level? Granted, some aiports already charge the maximum PFC, so maybe the PFC ceiling should be raised to $5.
As for the SAT runway extension, that airport actually charges a lower PFC than the maximum ($3 vs. $4.50) so if push came to shove they could raise the PFC and use those funds to get the runway extension done. Then again, that would require a functioning FAA…darnit…
The present state of affairs in politics is absolutely shameful. How things could reach a point that results in people losing jobs, even on a temporary basis, and passing up on tax revenue is incomprehensible. These politicians should not be called leaders to allow something like this to happen.
The only leaders holding the reauthorization beck are Harry Reid and Dick Durbin.