More airlines raise fares to grab tax savings

Link to the Story



Basically it states that a tax on the airlines has expired, and not been renewed. However, most airlines, have not reduced air fare to reflect this, but rather continue to charge the fee as if the tax was still in place. Now I have not gone digging to see if this air fare before was indeed charging $x.xx for this specific tax, and thus in effect has initiated the "money grab." If anybody know the specifics on this please post it.

Just lower those taxes, they'll be passed onto the consumers!

Is this the opposite of the "higher taxes will be passed onto the consumer" spin that we hear all the time? Just more BS.

What's interesting here is that the airlines were originally going to pass that tax savings onto the consumer but decided against it for no reason other than to make more money. I love you, free market, you're the best.

I did some research and found that most airlines have raised the base ticket price to offset the tax difference.

USA Today had this to say:

Spirit, Hawaiian and Alaska airlines are among the U.S. carriers that have not raised fares to offset a decrease in federal taxes that has resulted from Friday's partial shutdown of the FAA.

As for Spirit's rivals, The Associated Press writes "American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue all raised fares, although details sometimes differed. Most of the increases were around 7.5%," or roughly the amount of the federal taxes that were suspended Friday.

AP adds background on the taxes: The expiring taxes can total $25 or more on a typical $300 round-trip ticket. They died after midnight Friday night when Congress failed to pass legislation to keep the Federal Aviation Administration running. That gave airlines a choice: They could do nothing — and pass the savings to customers — or grab some of the money themselves. "We adjusted prices so the bottom-line price of a ticket remains the same as it was before ... expiration of federal excise taxes," said American spokesman Tim Smith. US Airways spokesman John McDonald said much the same thing — passengers will pay the same amount for a ticket as they did before the taxes expired.

As for details on the taxes affected by the shutdown, The Associated Press says they include "the 7.5% ticket tax; a separate excise tax of $3.70 per segment, or a takeoff and landing; a $16.30 tax on international arrivals and departures; a 6.25% tax on freight shipments, and other levies, according to a Treasury Department spokeswoman. Airlines would continue to collect the passenger security fee of $2.50 per segment and the 'passenger facility charge,' or PFC, of up to $18 per round trip, which helps pay for local airport projects."

USA Today

So, yeah, it looks like most of them are grabbing the money.