Congress Moves Up Date on Ticket Taxes, Sparking Industry Anger

WASHINGTON -- Congress surprised the industry by pushing up the collection date for the new international air ticket fees.

The law states that the new $24 roundtrip fee ($12 departure and $12 arrival) must be collected on tickets issued on or after Aug. 13 for international air travel on or after Oct. 1. The industry was expecting to start collecting the $24 on Oct. 1, the day after the current $6 departure fee expires.

The tax bill originally contained language that would have been much worse than the current situation. It would have forced airlines and agents to begin collecting the fee the moment President Clinton signed the bill into law, which happened on Aug. 5. The unconventional start-up date was overlooked by scores of airline lobbyists because they were too busy fighting among themselves over the form of the domestic ticket tax, according to sources close to the negotiations.

After Congress passed the bill, it was finally noticed that the airlines wouldn't have enough time to load the new international fee into their computers. House Ways and Means Committee chairman Bill Archer (R-Texas) averted a potential disaster by pushing a resolution through Congress that gave the carriers until Aug. 13 to reprogram their systems. Under the law, the industry will start collecting the new domestic ticket tax and segment fee on Oct. 1.

ASTA president Michael Spinelli voiced his displeasure with the early collection date for international fees, but conceded, "There is nothing agents can do." Paul Ruden, ASTA staff senior vice president of legal and industry affairs, said, "Clients should buy sooner rather than later. But Aug. 13 is right around the corner. I don't think there are going to be any massive changes in buying practices as a result of this, except perhaps, some people might decide not to go."

ARTA president John Hawks said the situation "just illustrates the federal government doesn't have any idea of how small businesses work, particularly travel agencies. It is the agents who are forced to explain to the passengers why they are paying the tax now."

Bill Best, director of travel for AAA Michigan, which does $170 million in travel sales, said it seems that Congress is saying "we've cut you off at the pass" to consumers who would have beaten the extra tax by buying their international tickets before Oct. 1. "The difficulty will be in explaining what the tax is for. [The government is] taking $6 and quadrupling it. What's the benefit for the traveler?" Best said. "It's an act of Congress. Need I say more?"

Rob Moses, vice president of corporate development at Hickory Travel Systems, said, "From what I understand it's not that significant" for business travelers. "Its more of a pain-in-the-neck type thing. I don't think it's going to greatly affect international travel." Moses noted any changes in the ticket tax deadline would be reflected quickly in the CRSs.

John Hintz, vice president of client services at Direct Travel in New York, said there has just been a "quiet acceptance" among clients. Michael Boult, general manager of supplier relations for Rosenbluth International, said, "Most of the clients don't really pay attention to the tax side of the business. On the international side of the house, there are really quite a lot of taxes."

The airlines were angry that Congress chose again to burden the industry with additional taxes, but they said they did not think the higher international fee would have a huge impact on sales.

Michael Milligan, Fran Durbin, Michele McDonald and David Jones contributed to this report.


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