FAA update – a tax holiday

SINCE its ‘temporary suspension’ on Friday 22 July, the US’ Federal Aviation Administration (FAA) has been unable to collect money on tickets, fuel and cargo, prompting airlines to hike their prices to offset a decrease in federal taxes.

The taxes affected by the shutdown include a 6.25 per cent tax on freight shipments and other levies, according to a Treasury Department spokeswoman.

This leaves airlines with the choice to do nothing and pass savings to customers or pocket some of the money themselves.

AirTran, American Airlines, Continental, Delta, JetBlue, Southwest, United and US Airways all raised fares at around 7.5 per cent to the equivalent of the suspended federal taxes.

“We adjusted prices so the bottom-line price of a ticket remains the same as it was before expiration of federal excise taxes,” American Airlines spokesman Tim Smith said. US Airways spokesman John McDonald echoed this – passengers will pay the same amount for a ticket as they did before the taxes expired.

Some fees however are unaffected by the shutdown – the September 11 security fee and some airport fees.

Domestically Alaska Airlines, Hawaiian and Spirit are among the US carriers that have not raised fares. Virgin America and Frontier Airlines reversed their decisions to pass the savings on to consumers.

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