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Aviation woes: the ripple effects of the FAA shutdown
Aviation woes: the ripple effects of the FAA shutdown
If you haven’t had time yet to catch up with the rather amazing FAA shutdown, it’s probably time to take a look at how this fiscal fiasco is affecting contractors and others in your region. By way of background: Here’s a helpful and concise “everything you need to know” blog post from Dylan Matthews at the Washington Post. Basically, since Congress failed to pass a funding bill, the Federal Aviation Administration has officially been shut down since July 23. It didn’t get a lot of limelight in light of the debt-ceiling impasse, but now that one federal financial mess is settled, the furloughing of 4,000 FAA workers and the ripple effect on tens of thousands of contractors should get some attention. This National Journal article, “Unfinished Business,” offers a rundown of some specific projects affected by the funding problem. They range from runway extensions to new control towers to off-airport sound barriers to holds on new firefighting and snow-removal equipment purchases. By some reports, some 70,000 construction workers and other contractors will lose paychecks over this delay, which could be extended for weeks until Congress reconvenes. Check with your area airport authority about any stalled projects and then start tracing the ripple effect through prime contractors, sub contractors, materials sales, even the area hotels and restaurants that may have been catering to construction crews, engineers and other nomadic experts. One other thought: Check out USASpending.gov; you can search by state, by agency to get a list of FAA prime or sub contractors; recent awards may also lead you to either pending projects or companies that routinely sell products and services to the agency. The shutdown could affect payments for real estate, cleaning services, right down to coffee supplies, I would imagine, making for blows to many small businesses. This TIME article, “How bad could it get?” lists more ripple effects, including the tax brouhaha. (With the FAA not collecting ticket taxes from airlines, some people think the carriers should pass these savings along to consumers. I’m not sure I agree. After all, other goods and service providers aren’t expected to forego windfall profits when costs decline; why should airlines be singled out? But I’m no expert in excise taxes and this might be a good topic for a Q&A with a local business-school expert on business taxation.) Note in reading Matthews’ post that part of the impasse over FAA funding has to do with continued suport of the Essential Air Service program, which subsidizes flights to small markets that otherwise would be money-losing routes for airlines. Delta Air Lines, for example, recently announced it might pull out of a couple dozen small markets, like Muscle Shoals, Ala., Devil’s Lake, N.D. and Escanaba, Mich., though it left the door open for a reversal should the EAS make the service worth its while. Here’s a good CNN roundup of the Delta issue; it’s also worth exploring the larger question of how the EAS helps your region, if at all. Here’s a link to the Essential Air Service portal on the Department of Transportation website; the list of subsidized communities, eliminated communities and rural airports may be fodder for localized reporting. One interesting aside: Despite the screeching halt to paychecks, some 40 FAA inspectors apparently are expected to continue working on their own dimes, including travel expenses. It’s a bit of a stretch but I can see some grist here for a personal finance story about deductible work expenses, paying income taxes on unemployment benefits and other tax and money implications for furloughed workers.

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