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Personal Finance > Saving & Spending > Travel
The politics of travel
April 27, 1998: 6:08 p.m. ET

A regulatory tangle of agencies can affect your business trip experience
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NEW YORK (Biztravel.com) - You may never have noticed that bearded gentleman in red, white, and blue sitting beside you on a business flight or commuter train, but if you travel for business purposes, Uncle Sam and his bureaucratic offspring are never far from your side.
     From certifying your aircraft or railroad car to directing traffic, to taxing your fare, your rental car and the bagel you ate in the hotel coffee shop, government agencies heavily influence your travel.
    
DOT, CAB, FAA
and other three-letter words

     The U.S. Department of Transportation plays the most direct federal role in your travel experience, but only because the Civil Aeronautics Board (CAB) was abolished in 1978 by Congress and President Carter.
     Since airline deregulation, leisure fares have declined but business travelers have had less to celebrate. During the past two years, business fares have risen 40 percent, leading many corporations to cut travel, instead turning to high-tech alternatives like video conferencing.
     Although the government has largely stayed away from airfare pricing, its regulatory power remains considerable. The DOT's Federal Aviation Administration (FAA) regulates aircraft safety and operating standards as well as overseeing industry conditions for pilots and other personnel. In addition, the FAA publishes guidelines on luggage, installation of x-ray machines, and explosives scanners and operates the air traffic control system.
    
Taxing down the runway

     Travel taxes appear everywhere, from gasoline to rental cars, hotels and tickets. The 43 largest U.S. cities collected $1.8 billion in hotel taxes in 1995. Increases on rental car bills have been fueled partly by taxes such as those in Atlanta and Seattle for the construction of sports arenas.
     The federal airfare tax expired in 1995 after a budget battle, allowing business travelers to enjoy the savings for several months. Even after the tax was reinstated in 1997 --combining a 7.5 percent flat rate with fees that vary from airport to airport -- veteran travelers sometimes found that the revamped tax structure produced slightly lower total costs, especially on nonstop routes.
     An effort to tax frequent flyer miles began in the 1980s when the IRS deemed awards a benefit and started proposing rules for collection. However, after a public outcry, the U.S. House recently began working to declare the awards non-taxable.
    
Airport authorities

     Most commercial airports are self-governing, although nearby governments usually appoint airport leaders. The Metropolitan Washington Airports Authority, which operates Reagan-National and Dulles Airports, is governed by a team of directors appointed by two governors, a mayor and the President of the United States of America.
     Airports get revenue from concessions, landing fees, and other fees, and most funding for airport construction comes from federal grants and revenue bonds.
     However, a new trend is emerging as more and more airports petition Congress to end restrictions on passenger facility charges (PFC) which regulate how airports spend their revenue. The FAA recently approved a request to use PFC revenue for a light rail system at New York's JFK Airport.
    
Hotel regulations

     State and local lodging taxes are only the visible tip of a regulatory iceberg. Several federal agencies oversee hotels, indirectly affecting business travel.
     The U.S. Consumer Product Safety Commission regulates fire sprinklers, linens, and drapes, while the Department of Justice certifies building codes for compliance with the Americans with Disabilities Act.
     The Environmental Protection Agency's WAVE program encourages water efficiency, and the Green Lights program promotes energy-efficient lighting.
     In return, the American Hotel and Motel Association supports a wide range of legislative proposals to aid business travelers, including restoration of 100-percent tax deductibility of business expenses for meals, entertainment, and spousal travel. The group also supports proposals that are not quite so favorable to travelers, including proposed reductions in access to toll-free numbers.
    
Other legislation

     Several bills before Congress may affect business travel.
     Airline legislation proposed by Arizona Senator John McCain addresses predatory pricing but also deregulates landing slots and flight quantities at busy airports. More aggressive bills threaten to remove slots from predatory airlines.
     Other upcoming proposals may take aim at the Wright Amendment, which protects DFW Airport and its chief tenant, American Airlines, from full local competition by Southwest and other regional carriers.
     The FAA has been active in Congress, too, requesting the power to operate the air traffic control system more like a business in 1999. If the proposal passes, the air traffic system would be supported by user fees, perhaps new ones. Back to top

  RELATED STORIES

DOT sets new airline rules - Apr. 6, 1998

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U.S. Department of Transportation

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.