Senate leaders quiz airlines about magnitude of tax windfall

by Charlie Leocha on July 29, 2011

Sen. Rockerfeller (D-WV) and Sen. Cantwell (D-WA) have sent a letter to the leaders of America’s airlines asking them pointedly, how much money are they making from their absorbtion of monies that were formerly going to FAA taxes.

There is no doubt about it that the airlines will have plenty of bridges to rebuild with legislators once this FAA tax debacle is over. What could have been a demonstration of the benefits of less taxes on consumer demand has become a picture-perfect exhibition that the airlines are only interested in lower taxes so that they can pocket more money in profits to feed their executives’ million dollar bonuses.

At $25-$30 million a day in new-found ex-tax revenue that is now gushing into the airline coffers, CEO and upper management must be salivating at the wonderful Christmas bonuses they will be served courtesy of the taxpayers.

As Sen. Rockerfeller said on the Senate floor, “It’s unconscionable.”

The other part of this tit-for-tat going on between the House and Senate over the FAA bill extension is what I find amazing. In order to protest bureaucratic process, not substance, jobs are being lost and the government has already lost in the range of $200 million dollars. Something that Sen. Rockerfeller, his committee and the Senate has already voted in favor of (Essential Air Services modifications) and that involves appropriation savings in the range of $14 million dollars, has already cost more than 10 times that amount and thrown some 75,000 workers into unemployment.

Either, Rockerfeller and his Commerce Committee cohorts need to swallow their hurt feelings and approve what they have already approved, or Mica and his House Transportation buddies need to back off and announce that they got their point across and get the FAA back to work.

One way or another, the FAA needs to back to work collecting taxes and repairing runways. Dragging this out past the August recess would be the height of irresponsibility and cost more than a billion dollars.

In the meantime, here is the letter sent to the airlines by the commerce committee. This is, obviously, the letter to Delta Air Lines. It went to:

1. Delta Air Lines
2. United-Continental
3. American Airlines
4. Southwest Airlines
5. US Airways
6. Alaska Air Group
7. JetBlue Airways
8. Republic Airways Holdings
9. Hawaiian Airlines
10. Spirit Airlines
11. Virgin America
12. Allegiant Air

The answers should be interesting.

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  • Tony A.

    Charlie,
    How about UPS and FedEx Fuel Surcharges? Are they affected by this since some taxes in jet fuel are also not collected?

  • http://www.tripso.com/author/leocha Charlie Leocha

    I don’t know. I have been focused on the passenger taxes. They are listed here.

    • 7.5% tax on the base ticket price;
    • Domestic segment tax of $3.70 per person per segment (a single takeoff and single landing);
    • International travel facilities tax of $16.30 per person for flights that begin or end in the U.S., or $8.20 per person for a flight that begins or ends in Alaska or Hawaii; and
    • 6.25% tax on the amount paid for transporting property by air.

    There may be some fuel taxes that are not being collected, but I am not certain.

  • http://www.tripso.com/author/leocha Charlie Leocha
  • Dave N

    It’s not going to make a bit of difference.  The only thing that is going to stop the airlines if if there customers refuse to fly.  They need to be regulated and there fares set by someone outside of the airline community.  If some of them go out of business so be it. I personally don’t believe for one minute that there in that bad a shape.  

  • Mapsmith

    I think that the airlines will respond by saying that they have kept on collecting the taxes in case during the reauthorization process, Congress decides that they need to make the FAA Reauthorization retroactive to the date they were not reauthorized.  Thus the Airlines will have the taxes already collected.  (and the use of the money tax-free during the wait)

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