If corporate taxes work the way personal taxes work, your statement is accurate only if the cost of the seat is a tax credit: $1.00 of write-off=$1.00 of reduction in tax liability. But, if they must write off the cost as a business expense -- reduce the net profit by the cost of the seat -- the airlines only get back a piece of the dollar (like itemizing your deductions). Also, reduced profit (or a larger loss) will have a negative effect on stock prices and the investment rating. It looks good on paper, but I can't imagine that the airlines are making money giving up first class seats to FAMs. Providing upgrades is an investment, even though airlines don't appear to make money on those seats, either. But, their business strategy is to build customer loyality, and providing upgrades is one way to do it.
My post was already getting pretty long, and I didn't want to get bogged down into all the details, so I do understand the reason for your questions. I'm definitely not an accountant, and I'm not sure which method the airlines are allowed to use. I was attempting to express that even if They do not receive the full price back in taxes (i.e. only a portion) that that portion is of a much higher value than that which they would receive from a paying First Class customer. Airlines (except for the super-savers) price the value of their fares much higher than what they actually sell the fare for. This has become so built-in to the system that poeple seldom realize it is done anymore. Best explained if I give an example. If a military member calls an airline and asks for a seat under the Military Discount which most airlines offer, the agent will inform him that it will cost less if he/she purchases a normal ticket. The way it works is this - (these are just hypothetical costs just to show how the system works) Airline X sets its full-price coach fare at $800, but every seat is always sold at a discount so that the price comes out to be $250. Built-in discount does not count for other discounts, hence the half-off Military Discount would put the fare at $400. Hence it is cheaper to just buy a normal ticket. This has made the Military Discount offered by most airlines absolutely useless. The airline is never going to sell a seat for what it claims the full value is (this allows them to tell virtually everyone they are getting a discount) yet when they write off a FAM seat, they are able to write off the FULL value (as they claim it to be). This is drastically higher than the price they would quote you if you called and asked for a First Class seat. My opinion is that even if they on receive a portion of this FULL price back in taxes, it will be a substantial amount. (Even without the above price markup, I believe it is the dollar for dollar tax-credit they receive, but did not want to state this as fact since its been a while since I learned about this - and I'm only fairly certain I remember that correctly).
Yes, they do. The DOD Joint Travel Regulation permits purchase of "premium class" tickets (mostly business class, but could be first class)
Also didn't fully address this due to how lengthy my post was getting. Suffice it to say that, although you are absolutely right in that this CAN be done, it is NEVER done for the run-of-the-mill FAM (what we call a Flying FAM). The Service is not going to pay more to put a non-mission-status Flying FAM in First Class for any reason - even though they could. I'm sure its done all the time for high level FAM Sups, but definitely not for Flying FAMs.
Concerning FF miles, are you prohibited from accepting them or has the airline refused to enroll FAMs in their programs? (or both???) When you're flying non-mission status, I also assume you have to book using the approved GSA city pairs, correct?
Its not the airlines, its Government policy. Remember that, up until the recent past, Gov't employees were not allowed to accept FF miles for Gov't paid fares. It was originally viewed as an unallowed gratuity, but that view has changed and employees are now allowed to accept FF miles. The seats assigned to FAMs for missions are non-revenue seats and so the collection of FF miles is strictly forbidden. The airlines are well aware of this and would refuse should a FAM attempt to get FF miles 'on the sly' for a mission seat, as well as file a complaint on said FAM. Other than that, I really don't know if the airlines would grant FF miles if it were left to them - but I would think not.
As for the GSA city pairs, we (I keep saying we due to context, even though I have left the Service...) are bound by all Federal Travel Regs for non-mission flying.
Hope this answers your questions, and is not too foggy (I've been up for about 24 hours...)
AP2001