Airlines Raise Fares as FAA Stops Collecting Tax

July 27th, 2011 by Mariah

Amid all the hubbub on Friday over the increasingly nasty debate over what to do with the nation’s debt, you’d be forgiven for missing this other political/spending story—one that has a direct connection to business travelers. The Federal Aviation Administration is out of money.

Congress failed to reach agreement on a measure that would have kept the FAA operating without problems, a move that led the agency to lay off 4,000 workers. None of those employees were air traffic controllers or safety inspectors, so the most critical part of the FAA’s job will continue to be done, but don’t expect anyone at the agency to pick up the phone to handle a passenger complaint.

For a brief moment, it seemed as though passengers might actually see an upside to the budget impasse. Without congressional authorization, the FAA is unable to collect certain taxes on tickets, about $30 on a $300 ticket. But never count out the airlines’ ability to see a chance to make a few bucks. Airlines like American, JetBlue and others raised their prices over the weekend. The hike? About $30 on a $300 ticket.