The recent unpleasantness about airline ticket taxes has come to an end, so it's time to assess how we managed this sordid affair. We're not handing out any A's.



First, the House and Senate failed at the outset for allowing this to happen. The lapse not only deprived the federal treasury of much-needed funds for aviation projects, but it also interrupted several FAA programs and services over which there was no actual disagreement.

Worse, the shutdown deprived thousands of federal employees of their livelihoods and also idled an army of construction crews who had been working on airport improvement projects all over the country, including new air traffic control towers for airports at Las Vegas, Memphis and elsewhere.

It is a common cliche on Capitol Hill to say that to get things done, partisan politicians have to put aside ideology and work together for the good of the country. It was true of the debate over the debt ceiling, and it was true of the flap over the FAA. But in the latter case, Congress utterly failed.

So for bringing confusion and unemployment to the innocent, and for allowing valuable FAA activities to be held hostage over extraneous issues, Congress gets an F.

We're also giving a D to all the airlines that raised fares by the amount of the absent taxes. From a bean counter's perspective, this was, of course, a defensible action: pocket the difference. It's what we would expect most airlines to do.

But a more elegant and clever response would have been to blast the airways with advertisements of the fares without taxes, exhorting passengers to "Look how much Uncle Sam has been taking. Buy now while the taxman is away."

Such a campaign would have adroitly underscored a point the airlines make every time the subject of taxes comes up in polite conversation: Uncle Sam takes such a big bite that the tax burden on air travel tends to depress demand by making travel look more expensive than it is. This was a lost opportunity.

ARC gets a B. It didn't do much to help agents and their clients cope with the uncertainty of the refund issue, but its response to ARTA's request was thoughtful and conciliatory at a time when its airline owners were not being conciliatory about anything.

The Transportation Department gets a C. Transportation Secretary Ray LaHood tried to talk the airlines into bringing fares down, claiming it was not "fair" to raise prices during the gap in taxation. This is going to sound cold, but the secretary is not empowered to regulate prices at all, much less on the basis of what strikes him as fair. The airlines made a business decision, and the marketplace gets to rule on those, not the politicians.

The Internal Revenue Service also gets a C. Granted, the IRS was not really in the driver's seat, but as a source of reliable information, it didn't acquit itself well. Its initial advice that passengers "may" be due a refund was not only too vague to take to the bank, but it turned out to be wrong. During the period of uncertainty, however, it blindsided the airline industry by telling inquiring members of the public to contact the air carriers. Even ASTA, which rarely sees eye-to-eye with the airline industry these days, thought the IRS was off-base.

To sum up, we are disappointed with the performance of just about everybody in the class, and while we hope that everybody learned something, we do not recommend that we repeat this course. Once was enough.
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