Bloomberg News

U.S. Congress Adjourns as FAA Workers Face Furloughs

July 22, 2011

(Corrects date in fourth paragraph.)

July 22 (Bloomberg) -- The U.S. Federal Aviation Administration will halt some operations at midnight after the House of Representatives and Senate adjourned today without agreeing on legislation to extend the agency’s authority.

The disagreement means the FAA has to furlough as many as 4,000 workers tomorrow and stop collecting about $200 million a week in airplane-ticket and other taxes until it is resolved, U.S. Transportation Secretary Ray LaHood said yesterday. Air- traffic controllers, considered essential employees, would remain on the job.

The agency has been without long-term funding legislation since 2007 and has operated on a series of short-term extensions, the most recent of which expires at midnight.

“States and airports won’t be able to work on their construction projects, and too many people will have to go without a paycheck,” LaHood said in an e-mailed statement today. The House and Senate will reconvene July 25.

Airlines won’t be allowed to collect taxes on ticket sales until the impasse is resolved. Carriers will have to reprogram their computer systems and websites to stop charging the taxes on tickets they sell, Steve Lott, a spokesman for the Air Transport Association, said by telephone today from Washington.

Ticket Taxes

Airlines have been “well aware” of the possibility of a partial shutdown of the FAA and have prepared for it “for a couple of days now,” he said.

Lott said he couldn’t comment on how specific airlines would change their fares or present their changes.

In past partial shutdowns, if airlines have accidentally charged taxes on fares, customers have had to get a tax refund through the Internal Revenue Service or the airlines, Lott said. The last furloughs at the FAA were in 1996 during a government- wide shutdown.

United Continental Holdings Inc., the world’s largest carrier, is “monitoring the situation very closely” and isn’t going to speculate on something that hasn’t happened yet, said Megan McCarthy, a spokeswoman for the Chicago-based carrier. She said the company doesn’t anticipate any operational impact and referred additional questions to the ATA.

Delta Air Lines Inc.’s operations will continue normally and without disruption regardless of the outcome of the FAA bill, said Trebor Banstetter, a spokesman for the Atlanta-based carrier, the world’s second-largest behind United. He also referred further questions to the ATA.

Dreamliner Certification

Boeing Co. still expects its new composite-plastic Dreamliner to be certified by the FAA by September for passenger service, because the employees involved are paid from the Treasury’s general fund, rather than from revenue generated by user fees and the ticket tax, said Tim Neale, a spokesman for the planemaker in Washington.

The House on July 19 approved a bill to keep the FAA funded through Sept. 16. Written by Representative John Mica, a Florida Republican who chairs the House transportation committee, it includes a provision restricting subsidies to small airports that has drawn the ire of leading Senate Democrats.

The House bill would eliminate assistance for air service to 13 rural communities, including towns in Nevada, home state of Senate Majority Leader Harry Reid; West Virginia, whose senior senator is Mica’s counterpart, Commerce Committee Chairman Jay Rockefeller; and Montana, whose senior senator, Max Baucus, chairs the Finance Committee.

‘Punish the Senate’

Rockefeller wrote to Mica on July 19 saying, “Your attempt to punish the Senate by hurting small community air service has backfired -- this language only guarantees that the Senate will reject the FAA extension.”

Baucus and Senator Lisa Murkowski, an Alaska Republican, today urged their colleagues to back extension legislation without the rural airports language. Republicans blocked that bill, offered by Baucus and Rockefeller, from a floor vote. Democrats then thwarted Republicans’ attempt to bring Mica’s version to a vote.

Furloughed employees would include engineers, administrative assistants and computer specialists. Air traffic controllers, considered essential employees, are exempt.

About $2.5 billion in airport construction projects would halt, LaHood said yesterday. Airport projects funded by the Airport Improvement Program would lose their construction workers and new projects wouldn’t start, he said.

Among the FAA employees who would be without work if an extension isn’t approved are 975 in Washington, 647 at the William J. Hughes Technical Center at the Atlantic International Airport in New Jersey, and 124 in Oklahoma City, Olivia Alair, an agency spokeswoman, said in an e-mail.

--With assistance from Puneet Kollipara and Kathleen Hunter in Washington, Mary Jane Credeur in Atlanta, Mary Schlangenstein in Dallas and Susanna Ray in Seattle. Editors: Andrea Snyder, Bernard Kohn

To contact the reporter on this story: Lisa Caruso in Washington at lcaruso7@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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