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Impasse over subsidies results in FAA shutdown

By Star-Advertiser Staff and News Services

POSTED:
LAST UPDATED: 11:36 p.m. HST, Aug 05, 2011



WASHINGTON » Efforts to avert a shutdown of the Federal Aviation Administration failed Friday amid a disagreement over a $16.5 million cut in subsidies to 13 rural communities, ensuring that nearly 4,000 people, including five in Hawaii, will be temporarily out of work and federal airline ticket taxes will be suspended.

Lawmakers were unable to resolve a partisan dispute over an extension of the agency's operating authority, which expired at midnight Friday EDT. The agency has been without long-term funding legislation since 2007 and has operated on a series of short-term extensions.

The subsidy cut was included by Republicans in a House bill extending operating authority for the FAA, which has a $16 billion budget. Senate Democrats refused to accept the House bill with the cuts, and Republican senators refused to accept a Democratic bill without it. Lawmakers then adjourned for the weekend.

A closer look at airline ticket taxes

A shutdown of the Federal Aviation Administration will mean that airlines no longer collect some federal ticket taxes, but other taxes would remain. A round-trip ticket with a base fare of $239.26 from Peoria, Ill., through Chicago O'Hare to Raleigh-Durham, N.C., would run up taxes of about $61, for a total cost of $300.

Those taxes include:
» Excise tax of 7.5 percent, $17.94.
» Four airport passenger facility charges of $4.50 each, $18.
» Four flight segment taxes of $3.70 each, $14.80.
» Four federal security charges of $2.50 each, $10.
» Total taxes: $60.74

The excise tax and the four flight segment taxes go away in a shutdown. Total savings: $32.74. Remaining taxes: $28.

Note: Taxes would be lower on a nonstop flight because there would be fewer flight segments. Other taxes apply to international flights.

Source: Air Transport Association

 

But underlying the dispute on rural air service subsidies was a standoff between the GOP-controlled House and the Democratic-controlled Senate over a provision in long-term funding legislation for the FAA that would make it more difficult for airline and railroad workers to unionize.

Obama administration officials have said the shutdown will not affect air safety. Air traffic controllers will remain on the job. But airlines will lose the authority to collect about $200 million a week in ticket taxes that go into a trust fund that pays for FAA programs.

U.S. Congresswoman Mazie Hirono (D-Hawaii), a member of the House Transportation and Infrastructure Committee, said an extended shutdown has the potential to cost thousands of jobs and billions in necessary construction funds.

"We must reach an agreement to extend this vital authority quickly," she said.

Hirono said that if the FAA is not reauthorized, airports nationwide could lose out on $2.5 billion in improvement grant funds this fiscal year.

The FAA said $21.3 million in construction funding for Hawaii would be affected without a funding extension.

Hawaii Department of Transportation spokesman Derek Inoshita said the $21.3 million is for airfield maintenance and that no projects have been halted.

"Funding for projects currently in progress have been in place for years, so these won't see any effects," he said.

Hawaiian Airlines said as of last night it won't collect federal ticket taxes that have expired. Spokesman Keoni Wagner said prices for round-trip interisland travel will be about $15 lower, and round-trip mainland travel will be about $30 lower.

Seattle-based Alaska Airlines, which flies 17 percent of its schedule to Hawaii, also said tickets sold beginning last night would not include federal ticket taxes. It said those taxes would include the 7.5 percent tax generally applicable to domestic transportation, as well as the 7.5 percent tax on amounts received from the sale of frequent-flier miles; the $3.70 domestic segment tax; the $16.30 international arrival/departure tax; and the $8.20 departure tax for flights between Alaska/Hawaii and the mainland.

"This represents a savings of approximately $44 off a $300 round-trip ticket, or about 14 percent. All other taxes and fees will continue to apply," Alaska spokeswoman Bobbie Egan said.






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