Here’s Another Washington Failure: The Unresolved FAA Shutdown Could Last Until September

Completely overshadowed by the painstaking dramatics of the debt ceiling negotiations was another, smaller-scale failure in government leadership. Ten days ago the Federal Aviation Administration -FAA- was forced into a partial shutdown due to lack of funding. Congress has been required to vote on short-term appropriations budgets for the FAA since 2007 when statutory funding was not renewed. Lawmakers failed to reach an agreement to extend funding due to irreconcilable differences in partisan positioning, with each house of government blaming the other for blocking the deal. House Transportation Committee Chairman John Mica commented on the failure in talks, “the current Senate leadership…refuse to negotiate in the best interest of the American public,” while Senate Commerce Committee Chairman John D. Rockefeller retorted, the House is not “serious about getting a comprehensive bill done.”

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The shutdown has now been going on for ten days, and has put a stop on airport construction projects, tax collection on air fares, and prompted the furlough of 4,000 federal employees. Bloomberg reports that the loss from tax revenues on air travel tickets has already cost the administration $250 million, and would total over $1 billion by the end of the month. The proceeds would have likely helped to fund infrastructure projects in airports across the country. Boeing Company (NYSE:BA) is also particularly annoyed, as it is awaiting FAA approval that would certify its new 747-8 model jumbo jet to be usable at airports nation-wide.

Congress is not expected to reach a compromise on a funding extension before it leaves for August recess after the debt ceiling deal is signed into law. The politics of the dispute involve union regulations, and Delta Air Lines (NYSE:DAL) in particular, which is looking to keep unions from being able to organize easily in the transportation industry. Airlines have responded to the tax collection hiatus by raising fares steeply as they try to gain on margins through the shutdown. The industry has reported one of its worst years in recent memory. Amid higher energy costs, second quarter earnings marks were disappointments for the majority of shareholders of air line operators.

Airline stocks are really getting drubbed today as an near-term resolution to the shutdown looks less likely by the hour:

Delta Air Lines, Inc (NYSE:DAL) -3.46%, AMR Corporation, American Airlines (NYSE:AMR) -4.61% United Continental Holdings, Inc. (NYSE:UAL) -3.84%, US Airways Group, Inc. (NYSE:LCC) -5.03%, Southwest Airlines Co. (NYSE:LUV) -2.57%, JetBlue Airways Corporation (NASDAQ:JBLU) -2.67%, Alaska Air Group, Inc. (NYSE:ALK) -2.25%, and Hawaiian Holdings, Inc. (NASDAQ:HA) -1.69%.

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