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With FAA taxes back, airlines lower fares to keep customer costs level

DALLAS — Airline travelers are finally catching a break. Even though the government is taxing tickets again, the total cost to consumers is staying about the same.

That's because airlines are rolling back prices to where they were before the government temporarily lost its authority to tax tickets two weeks ago.

The difference can add up. Federal excise taxes, which went back into effect Monday morning, add more than 7.5 percent to the cost of a flight.

Southwest Airlines and its AirTran Airways subsidiary lowered fares Sunday night and were matched by Delta Air Lines, AMR Corp.'s American Airlines, JetBlue Airways and others.

United Continental Holdings, the world's largest airline company, held out until Monday afternoon before also reducing fares. US Airways Group was still charging the higher prices, a spokeswoman said Monday afternoon.

Most U.S. airlines raised fares after a standoff between Republicans and Democrats in Congress on funding for the Federal Aviation Administration caused federal excise taxes on tickets to expire on July 23. In effect, the airlines grabbed the money that previously went to the government instead of passing the tax break to consumers.

By raising fares to offset the expired taxes, airlines were able to pocket an estimated $400 million in just two weeks.

Last week, Congress approved reviving the taxes through Sept. 16. The IRS then gave the airlines until the end of the weekend to resume collecting the fees.

The only question was whether airlines would roll back their short-lived price increase. Rick Seaney, CEO of FareCompare.com, said it wasn't surprising that airlines couldn't risk raising prices 8 to 15 percent on financially stressed-out consumers.

Tom Parsons, CEO of Bestfares.com, said the weak economy and stock market turmoil could force airlines to do more than just cancel last month's fare hike.

"They have to be concerned over (travel demand in) the fall," he said. "They may still have to bring fares down further."

Frontier to fly

only out of TIA

Frontier Airlines will consolidate all its Tampa Bay flights at Tampa International Airport, ending a brief stretch of flying at both TIA and St. Petersburg-Clearwater International Airport. Frontier moved Milwaukee flights from TIA to the Pinellas airport in December and its Omaha, Neb., flights in January. In return, St. Petersburg-Clearwater waived six months of airport fees and spent $125,000 marketing the flights. Frontier kept its Denver flights at TIA, but running operations at two airports 11 miles apart ultimately proved too costly, said Noah Lagos, director of St. Petersburg-Clearwater International. Frontier's Milwaukee and Omaha flights will return to TIA in December and it will begin twice-weekly service to Des Moines, Iowa. All those flights will run from mid December though mid April on 99-seat Embraer 190 aircraft.

With FAA taxes back, airlines lower fares to keep customer costs level 08/08/11 [Last modified: Monday, August 8, 2011 9:14pm]
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