Airline ticket tax ends and airlines take the opportunity to raise prices

Airline ticket tax ends and airlines take the opportunity to increase prices (Alberta Times) The airfare tax that the U.S. Federal Flight Administration has collected for many years has recently been terminated. Consumers could have enjoyed...

Airline ticket tax ends and airlines take the opportunity to increase prices (Alberta Times) The air ticket tax imposed by the Federal Flight Administration for many years has recently been terminated. Consumers could have enjoyed lower air ticket prices, but many airlines took this opportunity to increase prices and pocket the air ticket money originally given to the federal government. By Saturday night, nearly all major U.S. airlines were raising fares to replace the federal tax that had ended the night before. Rather than helping consumers save money, airlines pocket part of the difference in tax reductions, meaning that even though federal taxes are reduced, customers still have to pay the same price for air tickets. American, United, Continental, Delta, Southwest, AirTran and JetBlue are among the airlines that have raised fares, although the details vary. Most of the increases were around 7.5%. Only a handful of airlines are willing to share the reduced taxes with passengers, including Virgin America, Frontier Airlines and Alaska Airlines. For a typical $300 round-trip ticket, the terminated ticket tax is $25. The ticket tax expired at midnight on Friday night as Congress failed to pass legislation that would render parts of the Federal Aviation Administration (FAA) inoperable. This gives airlines a choice: they can do nothing – save their customers some money or make some extra money for themselves. The airlines declined to say how they would adjust fares if Congress were to impose a federal tax again. Mr Parsons of Bestfares.com said consumers should get the benefit of tax cuts. He said: "Why should airlines get the benefit of tax cuts? They already charge us a lot of fees, and now they are taking fees from the government." The Transportation Department said they will lose $200 million a week until Congress restores the tax. "Airlines can make an extra $25 million a day by raising fares during the tax holiday. This is an attractive figure. Over the past three years, airlines have been trying to deal with high fuel costs." Some airlines that do not increase fares are trying to use this event to their advantage. Virgin America sells its tickets with the slogan "Avoid taxes. Fly now." For September fares between Dallas and San Francisco, Virgin America's fares were $7 to $24 cheaper than United, Continental and American Airlines, respectively. Southwest's price increases have helped many other airlines. Southwest flies more passengers than any other airline, and fares on many routes are largely influenced by Southwest fares. Over the past two weeks, many airlines have been unable to increase fares because Southwest Airlines has not. Earlier this year, Southwest Airlines followed other airlines in raising prices six times. There are also baggage check and other fees. This resulted in United Continental, the world's largest airline, making $538 million in the second quarter. Fees for other government projects, such as security and local airport projects, are still being levied. These fees will increase the base ticket price of $240 to $300.