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Thread: More Congress stupidity

  1. #1
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    More Congress stupidity

    They let funding for the FAA lapse, so the FAA has had to lay off workers, including construction project workers. Also, the FAA can no longer collect tax on tickets and other things, so that revenue is being lost. Are those tax savings being passed on to consumers? What do you think? Airlines raised prices so the prices the consumer is seeing are the same, but the airlines are making more profit.

    http://blogs.wsj.com/middleseat/2011...t-tax-holiday/

    How much more dysfunctional is our government going to become?

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    Wow, the airlines got some serious balls with that move. Previously, folks had been suggesting that tickets would be temporarilly cheaper, since the airlines could no longer collect the tax. But they just jacked the rates?

    Seems like the airlines just missed an opportunity to get some extra business due to cheap tickets. But instead, they just boned it up, as they always do.

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    Quote Originally Posted by Timex View Post
    Wow, the airlines got some serious balls with that move. Previously, folks had been suggesting that tickets would be temporarilly cheaper, since the airlines could no longer collect the tax. But they just jacked the rates?

    Seems like the airlines just missed an opportunity to get some extra business due to cheap tickets. But instead, they just boned it up, as they always do.
    Have you been on a flight that wasn't full in the last couple of years (I actually have, but it's far less frequent than it used to be)? Airlines are not lacking for business.

  4. #4
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    I think the airlines are doing exactly what any smart business should. Is there anyone that is going to change their plans due to this?

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    A few will, but the country is to big and other modes of transportation are a far worse alternative for most people to even contemplate.

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    Heh nice to know that blog writer doesnt have a clue, I know for a fact Delta isnt collecting those taxes and is giving cheaper tickets to the customer.

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    Nice to see the bickering over the unionization of FAA workers drove the House to cause many to be furloughed from their jobs. I'm getting really sick of this shit.

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    Quote Originally Posted by Brettmcd View Post
    Heh nice to know that blog writer doesnt have a clue, I know for a fact Delta isnt collecting those taxes and is giving cheaper tickets to the customer.
    If all the airlines jacked their rates (rather than pass along the savings as Delta has) it would at least look like collusion.

  9. #9
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    Quote Originally Posted by Brettmcd View Post
    Heh nice to know that blog writer doesnt have a clue, I know for a fact Delta isnt collecting those taxes and is giving cheaper tickets to the customer.
    So is there any chance that you are going to provide any evidence of this fact?

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    Quote Originally Posted by malchior View Post
    So is there any chance that you are going to provide any evidence of this fact?
    The fact that I work for Delta in reservations currently and that is what I tell all my customers.

  11. #11
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    Unbelievable--all because the Republicans didn't want union elections for airline and railroad employees to follow the same rules that have applied for all other enterprises for years (basically, you have to actually vote against a union if you want your vote to count as a no, vs. just sitting on your ass).

  12. #12
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    Quote Originally Posted by Brettmcd View Post
    The fact that I work for Delta in reservations currently and that is what I tell all my customers.
    Although the partial shutdown means the FAA has stopped collecting about $200 million per week in airline taxes, many large carriers including Atlanta-based Delta Air Lines took the opportunity to hike fares and boost revenue, rather than granting travelers a tax holiday.

    "Given the high cost of jet fuel, Delta has been competitive with other airlines that increased their base fares following the expiration of funding for the Federal Aviation Administration to adjust for the taxes no longer being collected," Delta said in a written statement.
    ajc.com/business/atlanta-affected-by-faa-1045795.html

    "Been competitive" sounds like "hiked fares" to me. No? I would love to fly Delta for a change.

  13. #13
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    To be fair, Brett works for the Bizarro World Delta Airlines.

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    Quote Originally Posted by Timex View Post
    Wow, the airlines got some serious balls with that move. Previously, folks had been suggesting that tickets would be temporarilly cheaper, since the airlines could no longer collect the tax. But they just jacked the rates?

    Seems like the airlines just missed an opportunity to get some extra business due to cheap tickets. But instead, they just boned it up, as they always do.
    The yield management curves airlines use are based on gross, not nett rates (i.e. they estimate demand based on what people pay for a ticket, not what the airline receives)

    Given the short time period this is happening in, the rational thing to do is to keep the selling price constant (you've already set those selling prices at a level to fill the flights, reducing the price will only mean demand that you can't fulfil) It is just that the money the airline gets from selling seats has increased.

    If this is permanent, yes, you may see airlines react by adding capacity and lowering prices. But not now.

    So, Brett, do DL use QIK, or native greenscreen?

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    So Delta itself, as a company, admits that they raised fares. Brett, who claims to work for them and thus have inside knowledge, claims they didn't.

    Were you mistaken, Brett? That's forgivable. Willful ignorance or denial is not.

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    All I can say is that I have seen fares lower now when I reprice flight changes for people. I even see refunds for people whose circumstances waive any change fees.

    Is it dollar for dollar to what the tax difference is? That I cant say as fares are set by people far far above my pay grade. But I can say with 100% certainty that fares just did not just stay the same with the tax amounts still being fully collected and just going into the pockets of the company.

  17. #17
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    Good point. And I didn't mean to sound as harsh as that probably did.

    Is it possible that fees for other services were raised? Does Delta do cargo flights?

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    "Who are you gonna trust, me, or your lyin' eyes?!"

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    Quote Originally Posted by Robert Sharp View Post
    Good point. And I didn't mean to sound as harsh as that probably did.

    Is it possible that fees for other services were raised? Does Delta do cargo flights?

    Yes they do, but I don't deal with cargo other then just giving someone a phone number to call about questions and prices.

  20. #20
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    Interesting that the FAA collects taxes on tickets. Thinking out loud: why doesn't Treasury handle all tax collection? I could understand having FAA liaisons especially in setting tax policy but this strikes me as weird. Does the DoT collect like taxes on gasoline and car registration? Does the FCC collect taxes on broadcasting and such? Honest question for anyone who knows.

    edit: Also, Delta's customers might be paying less even while they raise the actual ticket prices. If you bought a $80 ticket with $20 in taxes before, you paid $100. Now with taxes gone, Delta could bump the ticket to $90 with $0 taxes. They are "charging more" but the customer is paying less. Granted this is highly simplified but still. The linked articles are careful to say what airlines are doing with fares and ticket prices without mentioning the specific impact to the buyer when taxes and everything is considered.

    edit2: hey look, I feel even less stupid. This appears to be similar to what is actually happening. $61 per ticket uncollected then an average 7.5% bump in base prices (pro-tip: the offset is about equal for an $800ish ticket). http://news.travel.aol.com/2011/07/2...ch-are-spread/
    Last edited by shift6; 07-26-2011 at 01:48 PM.

  21. #21
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    Quote Originally Posted by shift6 View Post
    Interesting that the FAA collects taxes on tickets. Thinking out loud: why doesn't Treasury handle all tax collection? I could understand having FAA liaisons especially in setting tax policy but this strikes me as weird. Does the DoT collect like taxes on gasoline and car registration? Does the FCC collect taxes on broadcasting and such? Honest question for anyone who knows.

    I think its not as much as they collect the taxes as the reauthorization bill would have set and continued the taxes, so without that bill passing they cant charge the taxes.

  22. #22
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    Brett is spot on with his assessment. I wondered the same thing that shift6 did and looked it up. As an aside, my next plane ticket will be through Virgin. Nothing personal, Brett ;)

  23. #23

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    Congress has failed to re-authorize the working budget of the FAA. This means as of Monday, the FAA is running only on a skeleton crew. This implies the FAA has no power to gather taxes. The requirement was that airfare ticket prices could be dropping when this happened. When the power ended, however, airlines hiked their prices. This implies most air travelers won't see any price drop.

  24. #24
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    Now Congress has adjourned without passing the FAA extension. The FAA will lose $1.2B in tax revenue, and as we've seen those tax savings aren't being passed along to the consumer.

    It's due to the Republicans attaching a rider that overturns a labor ruling that made it easier for airport workers to unionize. Yes, the Republicans are so anti-union that they are willing to starve the FAA and ultimately cost taxpayers more money. Construction projects have been abandoned but there are still ongoing costs associated with them.

    http://abcnews.go.com/Politics/faa-l...ry?id=14214937

  25. #25
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    How does that cost us more money? Ticket prices are still lower, overall, aren't they? A more serious criticism would seem to be that the terrorists will win now because the FAA can't secure us!

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    Quote Originally Posted by Robert Sharp View Post
    How does that cost us more money? Ticket prices are still lower, overall, aren't they? A more serious criticism would seem to be that the terrorists will win now because the FAA can't secure us!
    Who do you think is going to make up for the FAA's shortfall?

  27. #27
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    Quote Originally Posted by Robert Sharp View Post
    How does that cost us more money? Ticket prices are still lower, overall, aren't they? A more serious criticism would seem to be that the terrorists will win now because the FAA can't secure us!
    There are construction projects all over the country that have been put on hold due to this, and thousands of workers laid off. There are ongoing costs with these construction projects that don't disappear according to the article.

    A lot of the laid off workers will file for unemployment or look for different jobs, and that means there's the cost of replacing them and the cost of paying their unemployment benefits.

    It's all unnecessary. They could have passed a clean bill but the Republicans insisted on an anti-union rider.

  28. #28
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    It's important that we protect businesses and governments from their employees.

  29. #29
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    Yep, we have a small airport project in our little part of the country that employed a variety of contractors and others, and it is now on hold. The father of a guy that works in my lab had that as the first job he's had in a while, due to the recession, and he now is saying he'll likely have to file for unemployment again.

    I have no idea how it effects the country overall, but I do see one little piece of impact here.

  30. #30
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    Thanks for the explanations. I thought you meant in terms of ticket prices. But yeah, the construction costs (going to waste), layoffs, and subsequent unemployment costs will add up. Will they actually be more than the FAA taxes, or will they just be less efficient (since they are basically wasted)?

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