WASHINGTON, D.C.–(ENEWSPF)–July 29, 2011. In response to rising airline ticket rates following a partial Federal Aviation Administration shutdown, Senators Dick Durbin (D-IL) and Mark Kirk (R-IL) have sent a letter to Nicholas Calio, President and CEO of the Air Transport Association, calling into question the fare hikes instituted by many airlines.
Congressional authorization of the Federal Aviation Administration (FAA) expired on July 22nd, resulting in the shutdown of certain FAA responsibilities and pause in the collection of federal aviation taxes. Consumers expected reduced airfare from the break in federal tax collection. Instead, within 24 hours of the FAA shutdown, many major U.S. airlines raised fares by an amount equal to that of the newly expired tax. It should be noted that Spirit Airlines and Alaska Airlines have made the responsible decision to pass the tax savings on to consumers and they should be commended.
“Airlines should have the right to set their own prices based on the free market and current high fuel prices,” the Senators wrote. “However, when nearly every major airline increases its rates in such a short period of time at similar levels, we worry that this situation is not the result of competition-based pricing, but rather a collective effort to take advantage of federal inaction.”
[A copy of the letter is below]
Dear Mr. Calio,
We write to you regarding the current shutdown of certain Federal Aviation Administration (FAA) responsibilities, including the collection of federal aviation taxes. It has been reported that members of the Air Transport Association (ATA) have decided not to pass these savings along to consumers.
The value of the expired taxes totals approximately $200 million each week. According to a July 25, 2011, report in the Wall Street Journal, since the congressional authorization of the FAA expired last Friday, many airlines have raised fares by at least 7.5 percent, the same amount as the expired 7.5 percent federal excise tax on domestic airline tickets. The report highlighted two airlines – Alaska Airlines and Spirit Airlines – that returned the savings back to consumers.
Airlines should have the right to set their own prices based on the free market and current high fuel prices. However, when nearly every major airline increases its rates in such a short period of time at similar levels, we worry that this situation is not the result of competition-based pricing, but rather a collective effort to take advantage of federal inaction.
Moreover, a full page ATA advertisement in yesterday’s National Journal Daily claims a “big chunk of your [air travel] ticket is going to Washington.” As you know, the fees and taxes cited in your advertisement are not going to Washington, but instead are now part of the ticket price many airlines are charging. This advertisement should be corrected and appropriate outreach taken to ensure consumers understand these fees and taxes have been temporarily suspended.
Thank you for your attention to this issue. We encourage you to work with your member airlines to consider passengers and the high cost of flying. We look forward to your response.
Richard J. Durbin Mark S. Kirk
U.S. Senator U.S. Senator