How the 2022 Elections Will Impact the Industry: ASTA

By Matt Turner Nov 30, 2022 11:15am

Following this November’s elections, in which—according to The New York Times—Democrat will maintain control of the Senate, while Republicans took a narrow majority in the House of Representatives, the American Society of Travel Advisors (ASTA) sent a letter to its members addressing how the results will likely affect the travel industry.

Some of these “educated guesses” are as follows:

Employee Retention Tax Credit

Reinstatement of the Employee Retention Tax Credit (ERTC) will be a “heavy lift,” according to ASTA. The ERTC, which was initially created by the CARES Act and subsequently extended, provided a refundable quarterly tax credit of up to $7,000 per employee for businesses whose revenue has been reduced by at least 20 percent relative to 2019. It was due to expire on December 31, 2021 but the Infrastructure Investment and Jobs Act moved up the ERTC’s expiration date by one quarter—to September 30, 2021, rescinding the credit for the fourth quarter. ASTA has since worked on having that credit retroactively reinstated through the Employee Retention Tax Credit Reinstatement Act but it noted that “a bill like this will not move on its own—it needs a bigger “vehicle” moving through Congress to attach itself to.” Such a bill has not yet been proposed and there is quite a bit of “spending fatigue” despite reported bipartisan support for the ERTC.

Visit America Act

According to ASTA, the Visit America Act—which establishes an Assistant Secretary of Travel and Tourism position within the U.S. Department of Commerce, among other provisions to support the travel industry—should be passed during the “lame duck” session before January 3. This was on of the two policy priorities during ASTA’s Legislative Day 2022, and the bill was passed in the House in September by a vote of 325-93, while the Senate version was approved in committee and is pending in that chamber. This, too, needs a “vehicle” to attach itself to, but given its broad support and the fact that this legislation doesn’t meaningfully impact the federal budget, ASTA says, “in our view it stands a better chance of passage before the end of the year than does ERTC reinstatement.”

Department of Transportation Rulemakings

In August and September, the U.S. Department of Transportation (DOT) issued two major regulatory proposals, with comments on both due in mid-December. The first, on airline refunds, aims to strengthen protections for consumers seeking refunds for airline tickets but would make travel agencies responsible for issuing refunds (in certain transactions) regardless of whether the agency has possession of the client’s funds. The second would require airlines and travel advisors to disclose a range of airline ancillary fees to customers whenever fare and schedule information is provided for flights to, within and from the United States, including in “offline” (over-the-phone and face-to-face) transactions. As ASTA told its members, while the elections will not directly impact these proposals (since they are coming from the Administration as opposed to Congress), Republicans taking control of the House may present opportunities to pressure DOT to make changes, be it through legislative items attached to “must-pass” bills, questions posed to Administration witnesses in Congressional hearings or oversight letters sent to the Secretary of Transportation.

Previously, ASTA said it supported several provisions that ended up in the proposals but argued that travel agencies (or “ticket agents” under the statute) should not be responsible for the refund. ASTA President and CEO Zane Kerby noting the fairness and practicality of the provision, said:

“It is exceedingly rare for an agency to handle client funds in air transactions and thus are not in a position to issue a refund, and
“Agencies have no control over the alternative transportation offered to the consumer.”

Independent Contractor Policy

Simply put: With Republicans taking over the House, ASTA says “the chances of passing anything making major changes to labor law … for ICs are now close to zero.” Similar to the DOT rules, Republican control in the House will not on its own derail the U.S. Department of Labor’s (DOL) new interpretive regulation attempting to define employees versus independent contractor (IC) status under the Fair Labor Standards Act (FLSA) that was issued last month. This proposal—comments for which are due on December 13—reverts to the Obama Administration’s approach to ICs and represents a “clear, if modest, step backward” in terms of the risk associated with engaging ICs to sell travel. The proposed rule aims to “reduce the risk that employees are misclassified as independent contractors, while providing added certainty for businesses that engage (or wish to engage) with individuals who are in business for themselves.”

Federal Aviation Administration Reauthorization

The Federal Aviation Administration (FAA) authorization law that sets federal aviation policy expires at the end of September 2023. According to ASTA, “renewing (or ‘reauthorizing’) this law is considered must-pass since it, among other things, allows for the collection of federal taxes on airline tickets.” Discussions to do so were underway before the elections and, while this bill is generally nonpartisan, it is often delayed. ASTA’s issues with the policy includes the likes of: Consumer refunds, ancillary fees and reducing the regulatory burden on advisors who sell air tickets. ASTA adds that due to the expected gridlock in Congress, final action on the reauthorization bill will likely be punted into 2024, although hearings are expected soon after the start of the 118th Congress in January.