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Airlines hold onto expired taxes

Most passengers won’t see any savings from the expired taxes. But according to one analyst, airlines could make an addition $25 million a day.

Associated Press (2008)

Most passengers won’t see any savings from the expired taxes. But according to one analyst, airlines could make an addition $25 million a day.

What Uncle Sam stopped taking from travelers, most airlines are keeping for themselves.

Several federal airline taxes expired Friday evening after Congress was unable to pass legislation to prevent a partial shutdown of the Federal Aviation Administration.

The expired taxes would have saved customers from 12 to 15 percent, or at least $36 on a $300 round-trip ticket, said Rick Seaney, CEO of the travel website But just before midnight Friday, most major U.S. airlines raised fares by that same amount.

"They're like lemmings all jumping off the cliff together," Seaney said.

The four largest airlines at Tampa International Airport — Southwest, Delta, US Airways and American — raised fares. So did AirTran, JetBlue, United and Continental.

"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. Southwest and AirTran, which are currently merging, both raised fares $8 per round trip, said Southwest spokeswoman Marilee McInnis.

As of Monday morning, Alaska Airlines and discounter Spirit Airlines were saying they hadn't hiked fares to offset the tax savings.

"Effective immediately, Spirit is passing along all of these tax rollback savings to its customers," the no-frills airline said in a news release. "Some carriers have not been so generous and have pocketed the difference."

J.P. Morgan analyst Jamie Baker said last week that airlines could rake in an additional $25 million a day by raising fares during the tax holiday.

Early Saturday, airlines stopped collecting the 7.5 percent ticket tax, a separate $3.70 tax per segment — a takeoff and landing — and the $16.30 tax for international arrivals and departures.

They continue to collect the passenger security fee of $2.50 per segment and a "passenger facility charge" of up to $18 per round trip that goes to airports for construction projects.

Lawmakers couldn't settle disputes last week over extending the FAA's operating authority.

House Republicans wanted to eliminate $16.5 million in air service subsidies for 13 rural communities.

They included the cuts in their reauthorization bill. But Senate Democrats refused to accept the House bill with the cuts. Senate Republicans wouldn't accept the bill without them.

Information from the Associated Press was used in this report. Steve Huettel can be reached at [email protected] or (813) 226-3384.

Projects, workers on hold

Dozens of airport construction projects across the country are on hold and thousands of federal employees are not working because Congress failed to pass legislation to keep the Federal Aviation Administration operating, Transportation Secretary Ray LaHood said Monday. The FAA's operating authority expired at midnight Friday, forcing a partial agency shutdown. Dozens of stop-work orders were issued over the weekend for projects to build and modernize airport control towers, as well as other improvement projects, officials said. "Because Congress didn't do its work, FAA programs and thousands of public and private sector jobs are in jeopardy," LaHood said. All indications Monday pointed to a prolonged shutdown. Rep. John Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee, said there are no negotiations between the House and Senate to resolve the dispute, and House Republican leaders are determined to hold their position.

Associated Press

Airlines hold onto expired taxes 07/25/11 [Last modified: Monday, July 25, 2011 9:01pm]
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