With tax break, most airlines boost fares
Given a temporary tax break, most airlines pocket the money and charge passengers more.
HERALD STAFF AND WIRE REPORTS
WASHINGTON – In the wake of the Federal Aviation Administration shutdown, most airlines are pocketing money that previously went to taxes, and U.S. senators aren’t happy about it.
Sen. Jay Rockefeller (D-W.Va.), who chairs the Senate committee that oversees FAA’s budget, and Sen. Maria Cantwell (D-Wash.), who chairs the aviation subcommittee, are asking key industry officials to either put the extra profits into an account to be used to support federal aviation programs or roll back fares to levels before the tax holiday began. Spirit Airlines and Alaska Airlines did not raise fares, but others — including American Airlines, JetBlue Airways, AirTran Airways, Delta, United/Continental and Frontier — did.
In a letter sent Tuesday, the senators say that the unauthorized collection of federal ticket taxes could have “long-term negative repercussions for the industry.”
The FAA’s operating authority – including the authority it gives airlines to collect ticket taxes – expired Friday when Congress failed to pass a bill to keep it running at full speed, forcing a partial shutdown of the agency. As a result, the federal government is losing out on about $200 million a week in airline taxes not collected, U.S. Transportation Secretary Ray LaHood said recently.
For a brief time, it looked like that would result in a break for air travelers. But most airlines raised fares by the same amount as the expired taxes cost, leaving customers to pay the same as they did before.
“With the added ticket revenue and the reduction in sales tax on jet fuel, this could be a major boon for airline bottom lines if the issue goes unresolved for several weeks as the debt ceiling issue takes up all the oxygen in D.C.,” said Rick Seaney, CEO of travel website FareCompare.com.
The expired taxes can add 10 percent or more to an airline ticket.
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