Lawmakers, who have recessed until September, failed to reach an agreement that would reinstate the FAA and thousands of workers who have been furloughed since July 23 when the FAA’s operating authority expired. The government has already lost $200 million and could lose more than $1 billion without a resolution.
Sure, members of Congress have had plenty on their hands with the debt-limit debate, but a partial shutdown of the FAA affects travelers, employees and airlines alike. Here’s how:
Since July 23, the FAA has not been collecting federal ticket taxes, a loss that has already amounted to more than $200 million. And while essential employees like air traffic controllers and airplane mechanics are still working, nearly 4,000 FAA employees have been furloughed during the shutdown and more than 200 construction projects have been put on hold. With these projects stalled, thousands of construction workers are also out of work and will remain so until there’s a resolution to the stalemate.
Travelers who thought the tax holiday would be a boon to them quickly found that airlines were not willing to pass on the savings; they instead raised fares to make up for the suspended federal tax. Only three airlines — Spirit, Hawaiian and Alaska Air — have refrained from hiking up fares in order to pass on the savings (anywhere from $30 to $60 on round-trip tickets) to their customers. Airlines have even made it difficult for those who purchased tickets before July 23 with travel dates after July 23 to get refunds for the tax they already paid. Only U.S. Airways and Delta have agreed to directly refund the money, while other airlines are telling customers to apply for a refund through the IRS — the IRS, however, says “go to the airlines.” The IRS has yet to put into place a system to provide refunds, so a traveler’s best bet is to haggle with the airlines first.
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While airlines seem to be getting the most out of the impasse, collecting money that they do not have to forfeit to the government, the ramifications of the shutdown could very well be harmful in the long run. Not only will the tax issues create a logistical and possibly legal nightmare for airlines, but also, because numerous construction projects have been put on hold, there will be delays to renovations that would ready airports to service new Boeing 747-8 planes. Airlines — like American Airlines, which announced a huge purchase deal with Boeing in July — could lose out on packing the new jets, which can fit 467 passengers and are more fuel efficient.
So what could get the FAA up and running again? The AP reports that the Senate would need to agree to a previously passed House bill that cuts $16.5 million in air service subsidies for rural communities such as Morgantown, W.Va., Lancaster, Pa., and Glendive, Mont. Democrats object to the measure because small communities are already hurting from reduced airline service. But it’s hard to ignore the fact that the $200 million already lost in the week and a half of the shutdown equals the amount the entire service subsidy program costs for one year.
Still, Democrats say that the air service cuts are being used as leverage by Republicans who want Democrats to give in on a labor provision, which would overturn a rule that allows airline employees to form a union by a simple majority of those voting. Republicans say the new rule reverses 75 years of precedent in favor of labor unions.