FAA Shutdown: 4,000 Furloughed For One Week and Counting

Jul 29, 2011 3:14pm

ABC News' Amy Bingham reports:

A week after funding for the Federal Aviation Administration expired, there is still no end in sight to the partial shutdown that has sent 4,000 employees home without pay, shuttered 219 airport construction projects and cost $200 million in lost tax revenue.

But with Congress entrenched in the debt-ceiling battle, there is not much light at the end of the runway.

“For all the talk around here about debt and deficit, that money is being lost to the Treasury, and we're trying to figure out if it can be made up or not,” Transportation Secretary Ray LaHood told reporters at a White House briefing Thursday. “So for people who really care about debt and deficit, pass a clean bill.  Let's get back on track, let's get our workers back to work, let's get construction projects going again, and let's start collecting the tax that goes into the federal Treasury.”

LaHood stressed that airline safety will not be compromised and air traffic controllers, plane inspectors and test pilots will all continue working because safety operations are funded through the Treasury Department’s general fund. 

Engineers, project developers and construction managers, on the other hand, are funded through the FAA’s Airport and Airway Trust Fund, which Congress has not reauthorized the FAA to draw from.

Without reauthorization, the FAA cannot continue to collect the 7.5 percent federal excise tax on airline tickets or the $3.70 take-off tax applied to every flight.  Together, these taxes cost consumers about $57 on a $500 round-trip ticket with one layover each way.

Almost every major airline is now pocketing that would-be tax money, having raised base ticket prices so consumers pay the same amount despite airlines’ no longer paying those taxes to the IRS. Only Sprint, Hawaiian and Alaska airlines are passing the tax savings along to customers, according to USA Today.

Jean Medina, a spokeswoman for the Air Transport Association, said the airline industry is collecting about $25 million per day from the price increases.

“The good news for consumers is ticket prices are the same as they were last week,” Medina said.

Medina pointed out that as a whole, airlines are losing more money than they are making, posting a loss of $400 million from January through June.

“Airlines can’t continue to fly customers if they are losing money,” Medina said.

Democratic Sens. Jay Rockefeller of West Virginia and Maria Cantwell of Washington expressed their outrage over the price hikes in a letter to 12 of the largest U.S. airlines.

“We are writing to confirm whether your company is one of the airlines generating profits by exploiting its own customers,” the senators wrote. “The aviation industry is taking advantage of the tax expiration to pad profits.”

The airlines have until Aug. 3 to report to the committee how much they increased fares after the FAA partially shut down and how much money they are making from the increased fares.  

LaHood likewise scolded the airlines for pocketing the would-be tax money.

“They're collecting this money and it's going to their bottom line.  And I think that is not right, and I simply think it's not fair for them to do that. … And I’ve made that known to them,” he said Thursday.

Consumers might be able to recoup the taxes from the IRS.

“IRS has asked the airlines to provide refunds to eligible passengers when requested. However, passengers who are unable to obtain a refund from the airline may obtain a refund by submitting a claim to the IRS,” according to the IRS website.

The congressional reauthorization stalemate revolves around labor union voting rights and rural airport subsidies. Republicans, who passed a FAA funding bill through the House in April, want to cut $16.5 million worth of airport subsidies and reverse a labor law from last year that allows airline employees to unionize with a simple majority vote.

Traditionally, employees who did not cast a ballot were counted as “no” votes. The new law only counts the votes that were cast, making it easier to unionize.

Democrats refuse to take up the House’s bill and want both measures removed from any reauthorization bill.

Senate Majority Leader Harry Reid, D-Nev., has said he will not take up any FAA funding bills in part because he does not want to tie up the Senate in what could be a time-consuming fight, a leadership aide said, according to the Associated Press

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