FAA Shutdown Could Mean Cheaper Flights Without Taxes

  @ibtimes on August 03 2011 12:04 PM

U.S.

U.S. Secretary of Transportation Ray LaHood speaks during the daily media briefing at the White House in Washington (Larry Downing / Reuters)

If you were thinking of buying a plane ticket, right now may be the time to do it. The House and Senate recessed on Tuesday, August 2nd without renewing the Federal Aviation Administration's (FAA) operating authority, which expired at midnight Friday, July 22. This suspension means the FAA will no longer have the authority to collect taxes on flights, which means the government will stand to lose about $200 million a week in ticket taxes and close to $1 billion if the shutdown continues until the House resumes on Sept. 6.

These revenue cuts mean work on over 200 construction projects totaling $2.5 billion will be halted and some 4,000 FAA employees will be left out of work or asked to work without pay or compensation. However, air-traffic controllers still remain on the job.

"No safety issues will be compromised. Flying is safe. Air-traffic controllers are guiding airplanes. Safety inspectors are on duty and are doing their job. No one needs to worry about safety," said Transportation Secretary Ray LaHood.

But, the lack of taxes could mean cheaper tickets for fliers.

While the government is on vacation, here's what you're not paying:

Federal air transportation excise taxes includes the 7.5% tax on the base ticket price; a $3.70 domestic segment tax for each takeoff and landing; an 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 flights that begin or end in Alaska or Hawaii; and the 6.25% tax on the amount paid for transporting property by air.

This translates to around $60 worth of taxes on an average $300 domestic ticket, which means travelers could be saving a nice chunk of change. This does not, however, mean getting out of paying ATA airport and security fees- those costs will still show up in your final ticket price.

As of Tuesday, airlines began making adjustments to their websites and computer systems to reflect the tax-less ticket prices.

But, don't wait too long to book these no-tax flights. Within hours of the shutdown on July 23, airlines like U.S. Airways raised their fares by amounts equivalent to the absent taxes. Other airlines are likely to follow suite to avoid their own profit decreases.

Passengers who bought tickets and paid taxes before the shutdown (July 22) - but will be flying during the FAA's suspension, will receive tax refunds. Delta Airlines has already begun the long and complicated process of refunding fliers.

What is still unclear, is whether passengers who buy tickets without taxes will be expected to pay them back once the FAA's authority is restored sometime in September. These taxes are a vital resource for maintaining and funding airport improvements, construction projects and security and capacity improvements.

If you qualify for a refund, visit your carrier's website or call directly. Additionally, you can go to the IRS web site to find a Form 8849, Claim for Refund of Excise Taxes. But, be prepared, the form addresses all excise taxes, not just air-transportation fees, so read carefully.

Join the Discussion