Stalemate in Congress could be boon for air travelers

[jmbklj]

By DAVID KOENIG, AP Airline Writers
DALLAS (AP) — Gridlock in Congress could be a boon for airline consumers this weekend.
Several federal air travel taxes were set to expire Friday night if Congress failed to pass legislation to keep the Federal Aviation Administration operating. That means travelers could avoid about $30 in taxes on a $300 round-trip ticket — unless the airlines try to grab the windfall for themselves by raising fares to offset the expiring taxes.

Rick Seaney, CEO of travel website FareCompare.com, said airline reservations systems were alerted to stop collecting various taxes at midnight. "I am shopping at 12:01 tonight and so should the rest of the public," he said.

But it was possible that airlines could raise fares to offset the uncollected taxes. That would leave consumers paying the same amount to fly — just that more would go to the airlines and less to the government. Seaney and Jamie Baker, an analyst for J.P. Morgan, said that US Airways began raising fares Friday, apparently to offset the lower taxes. Baker said expiration of the taxes "represents a potential industry windfall" if airlines capture the government's share of consumers' money.

A spokesman for US Airways Group Inc., John McDonald, confirmed that the airline had raised prices. He declined to discuss specifics of the increase but said passengers are "likely not going to see any change in fares from what they would normally see" before the taxes expired.

Officials for United Continental Holdings Inc., Delta Air Lines Inc., AMR Corp.'s American Airlines and JetBlue Airways Corp. said Friday afternoon that they had not raised fares but declined to discuss pricing plans for the weekend. Southwest Airlines Co. did not immediately respond to a request for comment.

The FAA was headed toward a partial shutdown — air traffic controllers would stay on the job because they are considered essential workers — after lawmakers failed to settle a partisan dispute of legislation to keep the agency running.

The Associated Press: Stalemate in Congress could be boon for travelers

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Just read in today's paper that the major airlines in the US just raised their fares in responses to this and are going to pocket the extra savings for themselves! So not a boon for us poor travellers ;-(

[kyshel]

Just read in today's paper that the major airlines in the US just raised their fares in responses to this and are going to pocket the extra savings for themselves! So not a boon for us poor travellers ;-(

Delta didn't

[jmbklj]

Delta didn't

According to Fare Compare, it looks like Delta did raise their fares too, on Saturday, 7/24.

Also it looks like there is now a short-term funding extension of the FAA but not voted on.
Why do we always have to kick the can down the road rather than deal with the issue at hand properly? I guess that could be a whole other thread!

Airlines Benefit From Airline Ticket Tax Holiday, Not Passengers

[thepiranha]

Alaska Airlines, my favorite airline, did not raise their fares. I don't understand why the airlines are raising their fares at the same time that they're saving the 7.5% Federal tax that they won't have to pay anymore. It's counterintuitive.

[kyshel]

the point is that the Fed will likely require airlines to pay the taxes retroactively. if they don't collect them as a tax, they are now getting them as part of the ticket price.

[jmbklj]

The IRS asks airlines to refund taxes on tickets

IRS asks airlines to refund tax on tickets - USATODAY.com


"The Internal Revenue Service, in a notice posted Wednesday on its website, said it has asked the airlines to repay eligible customers who request refunds. Those who don't receive one from the airlines can submit claims to the IRS under procedures being developed, according to the statement.

"We agree that passengers are entitled to a refund based on precedent and case law from previous tax lapses," said Steve Lott, a spokesman for the Air Transport Association, which represents major U.S. airlines. "But we are puzzled by the IRS guidance on how to most efficiently get the refund," he said. "We believe it's the IRS' responsibility because ultimately it's the Treasury that has the tax money, not the airlines."

Airlines aren't required by law to issue refunds but the IRS would prefer they do, said Frank Keith, an IRS spokesman. "The airline," Keith said, "is in the best position to make that happen" because airlines have records on customers' ticket purchases and travel dates. The IRS may have difficulty devising refund procedures because electronic tickets don't leave a paper trail that a passenger may need to prove a purchase, Keith said.

Some airlines, however, are telling customers to contact the IRS and seek a refund. "At this point, we are recommending passengers contact the IRS for a refund, since the tax funds are allocated to the IRS at the time of purchase, not travel," said Brandy King, a spokeswoman for Dallas-based Southwest.

JetBlue posted a note on its website telling passengers it would provide refunds upon e-mail request for people traveling in the next seven days. It advised customers to check back later if they're traveling after that."

Expiration of Airline Ticket and Other Aviation-Related Taxes

I bet no one will see any of this money because you'll have to jump through too many hoops. Or there will be a new airline fee, a tax refund fee, as suggested by someone.

[[email protected]]

I just saw this news article today about the tax refund and was going to post the same thing - you beat me to it ;-)

[omegaet]

The IRS asks airlines to refund taxes on tickets

IRS asks airlines to refund tax on tickets - USATODAY.com


"The Internal Revenue Service, in a notice posted Wednesday on its website, said it has asked the airlines to repay eligible customers who request refunds. Those who don't receive one from the airlines can submit claims to the IRS under procedures being developed, according to the statement.

"We agree that passengers are entitled to a refund based on precedent and case law from previous tax lapses," said Steve Lott, a spokesman for the Air Transport Association, which represents major U.S. airlines. "But we are puzzled by the IRS guidance on how to most efficiently get the refund," he said. "We believe it's the IRS' responsibility because ultimately it's the Treasury that has the tax money, not the airlines."

Airlines aren't required by law to issue refunds but the IRS would prefer they do, said Frank Keith, an IRS spokesman. "The airline," Keith said, "is in the best position to make that happen" because airlines have records on customers' ticket purchases and travel dates. The IRS may have difficulty devising refund procedures because electronic tickets don't leave a paper trail that a passenger may need to prove a purchase, Keith said.

Some airlines, however, are telling customers to contact the IRS and seek a refund. "At this point, we are recommending passengers contact the IRS for a refund, since the tax funds are allocated to the IRS at the time of purchase, not travel," said Brandy King, a spokeswoman for Dallas-based Southwest.

JetBlue posted a note on its website telling passengers it would provide refunds upon e-mail request for people traveling in the next seven days. It advised customers to check back later if they're traveling after that."

Expiration of Airline Ticket and Other Aviation-Related Taxes

I bet no one will see any of this money because you'll have to jump through too many hoops. Or there will be a new airline fee, a tax refund fee, as suggested by someone.

This is a joke! I check with two different carriers this afternoon regarding tax refunds on two yet to be used tickets! This bottom line is a car full of clowns with the carriers pointing at the IRS and the IRS having no idea of what to do.

For us....we'll just move along and write the matter off to cost of doing business and enjoy our upcoming trips.

[LL_Travelfan]

The consumer is usually the last one to benefit from any of the airline ticket or other aviation-related taxes. I wouldn't hold my breath on seeing any benefits to the consumer on that one.