With Ticket Tax In Limbo, Airlines Raise Prices

Published: July 26, 2011

by Wendy Kaufman

TRANSCRIPT:

MARY LOUISE KELLY, host:

Okay, another story now. Airline ticket prices have gone up in the last few days, though most people probably didn't notice the increase. That's because of a federal tax that airlines aren't paying for the moment, and a decision not to pass the savings onto customers.

NPR's Wendy Kaufman has more.

WENDY KAUFMAN: Congress failed late last week to reauthorize the Federal Aviation Administration. That means the agency can no longer collect the ticket taxes that passengers normally pay. Those taxes add about 10 percent to the base fare, or about $40 on a $400 domestic ticket.

It could have been a nice price break for airline travelers, but Rick Seaney, the CEO of Fare Compare, says airlines raised prices by about the same amount as the tax.

Mr. RICK SEANEY (CEO, Fare Compare): So instead of the money going into the government coffers or into the consumer's pocket, it's going into the airlines' pocket.

KAUFMAN: Among the major carriers, only Alaska Airlines slashed all its prices to reflect the tax savings.

Joe Sprague is Alaska's vice president of marketing.

Mr. JOE SPRAGUE (Vice president, marketing, Alaska Airlines): Frankly, it's the right thing to do, to be able to pass savings like this onto customers.

KAUFMAN: Alaska Airlines says its new lower prices will be in effect for any ticket that's bought while there is no taxing authority - so consumers can buy tax-free tickets now for travel well into the future. Consumers who bought airline tickets which contained taxes may be eligible for refunds if their flight occurred while no taxes were on the books. But just how easy that refund process might be remains unclear.

Wendy Kaufman, NPR News. Transcript provided by NPR, Copyright NPR.