Airlines quietly raise fares after tax lapse - 548
Wednesday, July 27, 2011 at 10:19AM 
When Congress failed to confirm an extension of a bill funding the Federal Aviation Administration (FAA) last Friday, that seemed to be the end of it for federal taxes airlines collected from each ticket. It seemed that, in the short term, the prices of airline tickets would actually help consumers save some money, or at least the equivalent of the taxes on those tickets.
While some airlines (particularly Alaska and Spirit Airlines) decided to offer the lower fares, most airlines actually raised prices to equal what the taxes would’ve been. That’s right: they kept prices relatively equal, in essence pocketing the cost of the taxes. In a release from the Air Transportation Authority of America, spokesman Steve Lott said,
Customers are not impacted and are paying the same ticket prices they were last week.
As Forbes points out, this is the same entity who recently said “hiking aviation taxes would slow economic recovery, further burden customers and cost jobs”.
In light of this cash grab, members of Congress are voicing their displeasure. According to the same Forbes article,
Aviation Operations, Safety and Security Subcommittee Chairwoman Maria Cantwell (D-WA) and Chairman John D. (Jay) Rockefeller IV (D-WV) sent a letter to Mr. Richard Anderson, CEO of Delta Airlines and Chairman of the Air Transport Association, calling for an end to the profiteering, noting:
We are deeply perplexed by the industry’s pocketing of passenger tax revenue even though they expired on July 22, 2011. Most of ATA members have elected not to pass the savings along to consumers through reduced ticket prices, but rather have decided to increase the base fare of airline tickets…We urge the nation’s airlines to put all of the profits that they are making from the lapse of the aviation taxes into an escrow account so that they can be transferred back into the Airport and Airway Trust Fund when Congress reinstates the taxes.
Whatever happened to the airlines’ familiar refrain of blaming the taxes and fees for depressing consumer interest in air travel, thus hurting the industry? The increases aren’t likely to roll back when new taxes are imposed, so again, consumers will still be hurting.
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