More airlines raise fares to grab tax savings
DALLAS (AP) — The great tax holiday of 2011 for air travelers is just about over.
By Monday, most U.S. airlines had raised fares to grab the benefit of lower federal taxes on airline tickets.
A few airlines that were passing the savings on to consumers changed their minds and decided to keep the money.
Several federal taxes on airline tickets expired over the weekend after Congress failed to pass legislation to keep the Federal Aviation Administration running at full speed.
It could turn into a windfall for airlines if the stalemate in Congress drags on. The government estimates that the expiring taxes total $200 million a week.
Airlines justified their move by noting that consumers will pay about the same amount for a ticket as before. And with fuel prices much higher than last year, they can use the cash.
But some travel experts called the fare increases a public-relations mistake.
“One of the major airlines could have said, ‘Hey, at least for a week we’re going to give this money back to the consumers,” said Rick Seaney, who tracks prices as CEO of FareCompare.com. “I’m surprised no one made promotional hay over this.”
Airlines collect various federal fees, including a 7.5 percent tax on all tickets that expired at midnight Friday night. Once the taxes expired, airlines began raising fares by an equal amount. On some tickets, the taxes can top 10 percent of the price.
The consumer pays the same total as before, but airlines pocket the amount of the taxes.