Do As I Say…

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By Jane Calderwood

On July 14 the Air Transport Association issued a statement opposing any increase in aviation passenger taxes.  According to ATA President and CEO Nick Calio, “The industry already pays more than its fair share of taxes…” He did, to his credit, go on to point out that it is the passenger who pays the taxes, not the airline.

And the airlines have never been shy about opposing any change in the Passenger Facility Charge – again a fee paid by the passenger – even though the airlines make money off the collection of the PFC – claiming the price of tickets is so inelastic that any increase, no matter how small, would hurt the industry.  This opposition comes despite the fact the PFC is used for projects like rehabbing or building new terminals and expanding or building new runways, taxiways and ramps -all of which benefit the airlines.

This just makes it all the more perplexing that many airlines increased their fares, as of midnight Friday, to make up for the drop in cost that was coming due to the fact that the ticket taxes were no longer going to be charged because Congress failed to pass the needed 21st extension of the FAA’s operating authority.  JP Morgan analysts are predicting that the airlines could take in as much as $25 million A DAY during the shutdown from their fare increases while the Aviation Trust Fund, which pays for the upkeep of the entire system, will lose $200 million a week according to the FAA.

Anyone willing to make a bet on whether the fares drop once Congress reinstates the ticket taxes?