Congress Blows It, FAA Shuts Down, Airlines Profit in Different Ways

Congress has once again shown its inability to get anything done by actually letting the FAA reauthorization bill expire. What does that mean? Well, when Friday ended, so did the FAA, at least temporarily. Different airlines have used different tactics to profit, but for the general public, there is no benefit to this impasse at all. To be honest, the entire situation is simply pathetic.

Congress Earns Its Dunce Cap

Politics has gotten in the way of progress, probably to the surprise of nobody. The FAA has continued to be funded over the last few years with a series of extensions because Congress couldn’t agree on a new reauthorization, something that’s desperately needed so that we can move forward with programs like next generation air traffic control. While both sides of the aisle squabble over the details, at least they were smart enough to keep issuing extensions to keep the wheels of FAA going. This time, they apparently decided to take a stand and let it expire.

What’s the upshot? Until the FAA is reauthorized, all non-essential employees are laid off. (Yes, air traffic controllers still work and air travel remains unaffected operationally.) Funds for federally-assisted projects also dry up until this is done, so construction projects around the nation lie in peril. On top of that, the FAA no longer has the ability to collect taxes. This is a bonanza for airlines and sometimes for customers.

There are two distinct camps in the airline industry. Some took this as an opportunity to implement a “fare increase.” I put that in quotes, because the fare paid by the customer doesn’t change – it’s just that the airlines increased fares to replace the amount no longer being paid in tax. All of the bigger airlines are doing this, including Southwest and JetBlue. (Airline Reporter is keeping tabs on this in detail.)

The little guys, on the other hand, are just passing on the savings to customers and they’re not being shy about talking about it. The airlines in this camp include Alaska, Frontier, Hawaiian, Virgin America, and Spirit. Spirit is probably the most interesting, because it is using this as an opportunity to promote two things. One, it says it’s on the side of the people by passing back the savings and being transparent about it. Two, it’s encouraging people to write to their reps to tell the feds to allow taxes to be broken out in the future. (This is scheduled to change in the near future as part of new regulations from the DOT.)

You have to hand it to Spirit. When Spirit implements a new fee, it usually lowers fares. And when the feds stop charging taxes, Spirit gives it right back. This really does make Spirit look good, though to be honest I can’t blame the other airlines for trying to get a revenue spike at the same time. In other words, all airlines will get a temporary benefit one way or the other.

With any luck, this will end sooner rather than later and we can finally get moving forward with important projects. What’s the hold up anyway? It seems to be two things right now, and both are political games. First is over Essential Air Service Funding. The Republicans approved a bill that would change which cities would be eligible, and it just happens to leave out airports in important Democratic districts. The other is over union issues. Democrats pushed through a change before that made it easier for unions to organize at airlines. Republicans are trying to reverse that.

For an agency which has a multi-billion dollar budget, these little skirmishes are a complete joke and should in no way hold anything this important from going through. Unfortunately, that seems to be the way Congress works. So, take advantage of the tax decrease on those airlines that let you, and just shake your head at the incompetence in Washington for letting something like this happen.

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