Airlines raise fares, deny travelers a tax holiday

July 25, 2011|By Michelle Deal-Zimmerman | The Baltimore Sun

If you thought our government was dysfunctional over the looming debt ceiling debacle, it's really just one example of multiple layers of crazy inside the Washington Beltway. And, as always, it seems to boil down to the dirtiest five-letter word politicians claim to have ever heard: taxes.

In this case, we're talking about airline taxes. As of now, travelers should be saving about 7-10 percent on airfares because of a budget meltdown that has put the Federal Aviation Administration into a tailspin and denied it the ability - temporarily - to collect taxes or even function.

The U.S. House on Friday allowed funding for the FAA to expire, forcing layoffs but keeping "essential" personnel, like say, air traffic controllers. (Whew, that's a relief.) But why did this happen? Abdication of duty? Well, yes, but also because one party wants to make it more difficult for airline and railroad employees to unionize and that has held up agreement on the FAA's budget, according to news reports. Whatever. I'm still going with irresponsible.

So, as of the weekend, there's essentially a tax holiday for airline tickets because without the legislation, the FAA isn't authorized to collect the taxes that it usually does every time you buy an airline ticket. The federal excise tax is 7.5 percent plus flight segment fees - lower for non-stops and higher for multiple-stop flights. So we're talking something like $25-$30 on a $300 airfare. (Other taxes, like facility fees, are still being collected.)

But guess what? You're not saving anything because the airlines have decided to raise fares to offset whatever tax benefit fliers might have received. Yep. Just about every major airline hiked fees on Saturday so they could pocket the tax savings. (I mean the cost of jet fuel is so high and that baggage fee money just doesn't go very far.)

According to The Associated Press, American, United, Delta, Continental, Southwest, AirTran, and JetBlue raised fares by about, oh, 7.5 percent.

Airlines that didn't take the tax break bait, include Alaska Airlines, Frontier andVirgin America.

This whole mess really deserves a four-letter word response.

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