Airline Tax

[krainey]

Friday’s partial shutdown of the FAA means a decrease in federal taxes, but most airlines didn’t pass the savings onto their passengers—several airlines raised their fares to cover the difference. FAA funding expired on Friday, and while the administration is out of commission, it can’t collect taxes on airline tickets and has to roll back taxes on jet fuel. On domestic airline tickets, that’s a 7.5% federal excise tax plus a 3.7% flat fee—or, a total of about $44.80 in taxes on a $400 ticket.

Some airlines have not changed their fares following the airline tax holiday—Spirit, Virgin America, Frontier, Hawaiian, and Alaska are among the airlines who kept their rates the same. While the FAA is shut down, tickets on these carriers will be cheaper than usual. From other airlines, there is no word as to whether fares will go back down once the FAA is up and running and the federal taxes return.

[d360]

Thank Alaska! one of the few to pass along the savings. $30 on a $300 ticket.

[hbo34]

I can't believe that the FAA can’t collect taxes on airline tickets and had to roll back taxes on jet fuel, yet most airlines were allowed to raise their prices quickly to soak up the tax savings. Thank god that Alaska Airlines and Spirit Airlines are the exceptions and are letting travelers have the savings, which I think it is a smart move by the airliners.