Potential FAA Shutdown Could Mean Tax-Free Airfares For Travelers

Unless Congress can hammer out their issues over extending the FAA’s operating authority by midnight tonight, 4,000 agency employees will be temporarily out of a job, but travelers will be able to but airline tickets without paying federal taxes.

If the partial shutdown happens, flights will continue and air traffic controllers would remain at their screens, for now.

Reports the AP:

But airlines would no longer have authority to collect a federal tax on tickets, which could be a temporary financial boon for passengers. About 4,000 FAA workers, whose jobs are funded with ticket tax revenues would be furloughed, [DOT Secretary Ray] LaHood told reporters at a news conference. The FAA employs more than 47,000 people overall.

LaHood said a shutdown would cost the government about $200 million/week in lost taxes and that $2.5 billion in airport construction projects would be put on hold.

While the shutdown would not immediately impact flights, Senator Jay Rockefeller of West Virginia, chairman of the Senate committee that oversees the FAA, said the agency “estimates that it could only operate air traffic and support services through mid-August… This would mean services to smaller areas like mine — West Virginia — would need to draw down in the near term so that the FAA can focus on primary traffic. That’s not something we would look forward to.”

The bill that would extend the FAA’s operating authority is being held up over partisan politics, with Republicans looking to cut subsidies for a handful of rural airports and to add provisions to the bill that would make it more difficult for employees to unionize.

An FAA rep says that airlines have been alerted to the potential for a shutdown so that they do not charge federal taxes on airfares if it occurs.

FAA faces partial shutdown at midnight; airfares won’t be taxed [Chicago Tribune]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.