Airlines Earn Extra Profit Due to U.S. Debt Deal Debate

Airlines Earn Extra Profit Due to U.S. Debt Deal Debate

As of last Saturday, the United States government has been unable to collect taxes from airlines. While normally the airlines would have to set aside the tax dollars built into the price, due to the U.S. Congress failing to pass a budget deal that funds the Federal Aviation Administration, the tax has not been collected from the government and the money not set aside by airlines themselves.

 

This aviation tax, built into the cost consumers pay when purchasing airline tickets, has remained part of the price consumers have paid since Saturday. The Airlines failed to subtract the tax valuation from the price consumers pay and instead have been collecting additional revenue and profit.

 

Airlines Earn Extra Profit Due to U.S. Debt Deal Debate

Airlines Earn Extra Profit Due to U.S. Debt Deal Debate

Airlines were allowed to reduce the price to subtract the federal aviation tax, during the tax holiday, but instead have chose to keep the prices near the usual tax included rate. Had airlines reduced the price in accordance with the tax holiday, consumers would be paying anywhere from $25 to $50 less per flight, instead they are taking in an additional $25 to $50 as revenue.

 

Some U.S. lawmakers responded with outrage saying that the difference should have been passed on to consumers in the form of savings, stating that a common statement by airline owners is that these taxes lower their airline ticket sales and hurt their business, but when given the opportunity to reduce the price, airline owners chose not to.

 

Senator Rockefeller, Democrat from West Virginia, and Maria Cantwell has called upon the airlines to instantly put the profits gained from the tax holiday into an Escrow Account to be set aside to pay the Airport and Airway Trust Fund when the tax is reinstated. However they airlines have no obligation to pay a tax that was non-existent at the time of the transactions, leading Rockefeller and Cantwell to say that the integrity of the Airport and Airway Trust Fund has been compromised, so at the very least the revenue should be instead sent to consumers in the form of savings.

 

In an average week, the tax generates near $200 million, however despite claims by Congressman and Senators that airlines are “ripping off” consumers, this base airline charge is due to their own regulations, taxes and fees. Many airlines across the nation have struggled in recent years, providing justification for airlines to take any break from the government leeching their revenue and have any opportunity to bring in additional revenues and profit.

 

The Air Transport Association are already working on a rebuttal to U.S. lawmakers claims, adding that they have for years urged congress to pass long term FAA  bill.

 

 

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