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FAA Shutdown: Airlines Raising Airfares During Tax Break

By Admin on July 27, 2011 6:46 AM

Congress has failed to extend the funding for the Federal Aviation Administration (FAA). As a result, the FAA's shutdown has affected some services: they've had to furlough employees and freeze some funding meant for airport construction. Part of the shutdown, however, means that it's essentially an airline ticket tax holiday: the FAA won't be collecting some of its airline ticket taxes.

Except that most traveling consumers won't be feeling the effects of any tax savings. Most airlines have now raised their ticket prices, taking advantage of the lack of airline ticket taxes.

The airlines that have raised their ticket prices include Delta Airlines, American Airlines, US Airways, United, Continental, Southwest and AirTran.

The airlines that have not raised their ticket prices include Alaska Airlines, Spirit, Hawaiian Airlines and Frontier. Virgin America had previously said they would not raise their prices, but have since flip-flopped on the issue, reports MSNBC.

The expired taxes can top up to 10% of a ticket price. Amongst the taxes that are not being collected for now includes a 7.5% tax on all tickets, reports MSNBC.

The total amount of the ticket taxes are about $200 million per week, MSNBC reports.

The airline industry, which has been hit by high cost of fuel, could likely benefit some from the increased fares, according to MSNBC. Plus, according to a spokesman for the Air Transport Association, the fare increase would be beneficial for airlines without actually increasing fares for consumers because they would have been paying the same fare if the ticket taxes were still there.

Whether or not you agree with airlines charging higher fares, keep in mind that the airline ticket tax holiday might only be temporary. The partial FAA shutdown might end if the Senate passes the House-approved bill that would extend funding, reports the Los Angeles Times.

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