LaHood: Airlines should not keep tax revenues during FAA partial shutdown

Airlines should not raise fees on tickets to add money that would normally be paid in taxes to their profits, Transportation Secretary Ray LaHood said Thursday.

Taking his message that Congress should end the partial shutdown of the Federal Aviation Administration to a larger audience, LaHood spoke at the beginning of White House press secretary Jay Carney's daily press briefing.


He again made the case for ending the impasse, saying that money that would normally go to paying 4,000 FAA workers who have been furloughed was instead going into airlines' bank accounts.

"I'm not happy about the fact that they're continuing to add fees to citizens' ticket prices," LaHood said. "These are people who are planning a vacation. People who are buying tickets, who are living on a budget. 

"That's not right and I've made that known to them," he said of the airlines.

LaHood said the Aviation Trust Fund, which paid for the furloughed workers until a bill that authorized the money to be collected and spent expired last week, collects about $200 million a week from taxes on airplane ticket purchases.

The money has not been deposited into the trust fund for almost a week because the last appropriations bill for the FAA expired last Friday at midnight. The House and Senate could not agree by then on a new measure, and the chambers are still gridlocked almost a week later.

The problem is a provision in the House version of a short-term extension of the FAA funding bill that eliminates some subsidies for rural air service through the Essential Air Service program. A longer-term bill has been bogged down by a House effort to undo rules on unionization of railroad and airline employees that would make it harder for them to vote to collectively bargain.

The FAA has not had a long-term authorization bill since the last measure that was passed in 2004 expired in 2007.

Even as the Transportation secretary complained Thursday about ticket prices being raised, he said again that the FAA shutdown was not affecting the safety of passengers.

"Air traffic controllers went to work today," he said. "They're guiding planes into airports."  

However, the concern that airlines were keeping the money has also been raised by members of Congress.

"The ill-advised decision by US Airways to essentially pocket the federal ticket taxes paid by the traveling public brings new meaning to the phrase, 'the sky is the limit,' ” Rep. Mary Bono Mack (R-Calif.) said in a letter to U.S. Airways President Doug Parker Wednesday. 

"While this action may not be illegal, it’s certainly a theft of consumer trust," Bono Mack continued. "I strongly urge you to reverse this new policy and issue refunds to passengers or place the money into the trust fund that pays for airport improvement projects."

Bono Mack, who chairs the House subcommittee on Commerce, Manufacturing and Trade, said the situation "raises a number of relevant oversight issues.

"Most notably, how is it that nearly all of the major airlines inexplicably raised fares by approximately 7.5 percent the day after the federal taxes expired?," she wrote. "Was it simply a coincidence? I hardly think so, especially when a spokesman for the Air Transport Association reassured Americans that they 'would not be paying more than they planned' for an airplane ticket. That’s hardly the point. Consumers today should be paying less for a ticket without the relevant federal taxes being collected."

Bono Mack added that airlines keeping the money that cannot be collected for the FAA during the impasse "raises the ugly issue of profiteering on the impasse over the Federal Aviation Administration (FAA) authorization legislation.   

"While I have been sympathetic to the airline industry’s ongoing struggles to meet higher and higher fuel costs, this back door grab for money is simply unconscionable," she wrote.

For his part, LaHood used the increased spotlight on the FAA issue from the White House press briefing to press Congress to end the stalemate.

"This is not the time to be laying off 70,000 construction workers," LaHood said in remarks that were broadcast by at least one cable news network. "These are friends and neighbors of people who live in communities."

He admitted, though, that the ongoing federal debt-ceiling negotiations showed there were a lot harder lines being drawn in Washington now than when he was a congressional staffer and later a Republican lawmaker.

Still, on the FAA bill, the debt-ceiling negotiation and all the other big fights these days in Washington, the former lawmaker-turned-Transportation-secretary said the solution was simple: compromise.

“That whole period of time was a very rich history and legacy of compromise,” LaHood said. “That's how Congress has always solved problems, through compromise, through people working things out, through people putting aside their own agendas and their own egos, deciding what's important for the American people.”

LaHood added that lawmakers who are concerned about the federal debt and deficit should want to see the FAA impasse end quickly.

"That's real money to the Treasury," he said. "For all the talk about debt and deficits, that's real money that's being lost."