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Airlines Reinstate Collection Of Federal Excise Tax For Air Cargo

Airlines Reinstate Collection Of Federal Excise Tax For Air Cargo

Airlines operating in the U.S. are once again collecting the federal excise tax on freight shipments that were suspended for most of last year to help the industry survive the economic fallout from the coronavirus pandemic.

The $2.2 trillion economic stimulus package known as the CARES Act provided an aviation tax holiday from March 28 through the end of 2020. Airlines were not required to charge the 6.25% tax on goods shipped by air or the 7.25% tax on passenger tickets, as well as other passenger fees, as a way to help attract customers. During that period, the government also did not impose excise taxes on jet fuel.

Delta Air Lines (NYSE: DAL), and other carriers, have notified customers that the federal excise tax is being applied to cargo, effective Jan. 1.

The Congressional Budget Office and the Joint Committee on Taxation last April estimated the suspension of aviation excise taxes would reduce federal revenues by $4 billion. 

"We are immensely appreciative of all federal relief efforts, including the temporary suspension of certain aviation excise taxes, during the most challenging crisis in the history of the U.S. airline industry," Airlines for America said in a statement provided to FreightWaves. "U.S. airlines have always been critical to our nation's economy and infrastructure, and we look forward to helping lead the country's economic recovery."

On Dec. 28, President Donald Trump signed a $900 billion follow-on relief bill that included an extension of the Payroll Support Program, with $15 billion for airlines. Under the first dose of emergency aid, passenger airlines received $25 billion through the end of September to prevent layoffs and cargo airlines received $4 billion.

The new law provides payroll assistance through March 31. Airlines that planned to downsize their workforces because of the severe downturn in passenger business rescinded layoff notices. United Airlines (NASDAQ: UAL) and American Airlines (NASDQ: AAL) recalled 32,000 workers furloughed since Oct. 1 and reset pay and benefits to Dec. 1. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch. 

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