Maybe It Will Trickle Down, Eventually

One aspect of the whole budget debacle raging in Washington right now is that Congress failed to fund the FAA. This means some 4,000 FAA workers have been laid off and air carriers are raking in millions in an unintentional federal “tax holiday” as the FAA’s revenue-raising authority expired. The FAA says it’s losing $30 million a day.

So, with air carriers no longer required to levy a federal tax, U.S. travelers should see a drop in ticket prices, right? Isn’t that what the righties are always telling us? That these burdensome federal taxes for things like the FAA are just passed on to the consumer, and if we lower these taxes and make the government smaller everything will miraculously get cheaper for consumers?

Um, yeah, not so much:

DALLAS (AP) – Airlines are tossing consumers aside and grabbing the benefit of lower federal taxes on travel tickets.

By Saturday night, nearly all the major U.S. airlines had raised fares to offset taxes that expired the night before.

That means instead of passing along the savings, the airlines are pocketing the money while customers pay the same amount as before.

American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue all raised fares, although details sometimes differed. Most of the increases were around 7.5 percent.

The expiring taxes can total $25 or more on a typical $300 round-trip ticket. They died after midnight Friday night when Congress failed to pass legislation to keep the Federal Aviation Administration running.

That gave airlines a choice: They could do nothing — and pass the savings to customers — or grab some of the money themselves.

“We adjusted prices so the bottom-line price of a ticket remains the same as it was before … expiration of federal excise taxes,” said American spokesman Tim Smith. US Airways spokesman John McDonald said much the same thing — passengers will pay the same amount for a ticket as they did before the taxes expired.

And the airlines pocket the difference. Passing the savings on to consumers is so last century! No, when today’s titans of capitalism see a river of cash, they’re going to hoard it for themselves.

Anyone think this extra influx of cash will go towards things like “job creating”? Ha! Dream on! My money’s on this river of cash flowing directly into executive’s pockets. After all, American Airlines’ CEO saw his salary increase 11% last year, despite losing $471 million for the company. Talk about falling upwards! Yeah, I hate to be a cynic but anyone who thinks the airlines are going to let their windfall “trickle down” on the rest of us is delusional.

Mr. Beale and I had to travel to Los Angeles this weekend for an unexpected family situation (and that reminds me: this picture was taken of the Neighborhood Unitarian Universalist Church of Pasadena). Because the trip was last minute, our tickets were quite expensive. I just checked my receipt and noticed we were charged $78.15 in taxes and fees per ticket. That’s more than $150 in taxes and fees, at least some of which were unnecessarily levied and amount to a fare increase by American. With the air carriers already gouging us over things like baggage fees, it frankly pisses me off.

For one thing, I’m going to ask American Airlines for a refund on these FAA taxes, which they’re just keeping for themselves. For another thing, this proves yet again that the righties’ belief that corporations will magically stop being greedy and discover some kind of benevolent bone for their customers is just delusional.


I find this 2009 interview with American Airlines CEO Gerard Arpey extraordinarily ironic.

All about “suffering” and “confronting reality” and “government debt is bad” and “integrity” and “difficult choices,” meanwhile he diverts a river of cash that rightfully belongs to his customers and the American people straight to his company’s coffers. What an ass.


Filed under American Airlines, corporations, taxes, travel

5 responses to “Maybe It Will Trickle Down, Eventually

  1. Proud Socialist

    Organized crime didn’t die off with bad guys like Michael Corleone and the old mob.. they just moved to the corporate boardroom. And Congress.

    Of course they would not pass on the ‘savings’ of a tax break to the consumer — only a complete patsy would even think that.

    Businesses would put sawdust and broken glass in pancake mix if they thought they could get away with it.

  2. Min

    They’re not delusional; they’re liars.

  3. Sue Rainey

    Caution with the finger-pointing. Things will always be a mess in Washington while “politicians” are involved. I don’t care if they’re red, blue or plaid.

  4. I am more comfortable with politicians being involved than lobbyists and corporate interests.