No FAA Authorization Means No Airline Taxes. Predictably, Flyers Still Get Screwed.


Since the members of Congress are busy freaking about at the debt ceiling and light bulbs and some other stuff, they haven't managed to extend authorization to keep the Federal Aviation Administration (FAA) running. Which means there's no one behind the till to collect the taxes that inflate the price of an airline ticket—including the 7.5% excise tax on domestic airfare, the $3.70 federal charge per flight segment and the $16.30 tax on international arrivals and departure. That's $25 million a day in federal revenue forgone as of Friday.

Gizmodo calculates that passengers should be saving $25 to $50 on their tickets. You knew there was going to be a but, right?

As of Saturday, the FAA and federal government is losing out on $25 million a day in tax revenue,…which should technically result in consumer savings but instead is fattening the pockets of airlines. In anticipation of these airfare taxes expiring, airlines shrewdly bumped up their fares "by the same amount as the federal taxes". That means even though there are no taxes for consumers to pay, consumers all still paying the same price as before (with the airlines taking all the 'tax' money).

Bonus: Airlines are refusing to say that they will lower fares again when the taxes kick back in!

Actual bonus: Greg Mankiw explains the economics of who pays airline taxes here