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Ticket taxes expire, but airlines fill gap

Sun., July 24, 2011

DALLAS – Some airline customers won’t see savings this weekend even though several federal taxes on tickets have expired.

US Airways and American Airlines say they’ve raised fares to offset any tax savings.

That means instead of passing along the savings from expired taxes, the airlines are pocketing the money while customers pay the same amount as before.

The expired taxes can total $25 or more on a typical $300 round-trip ticket.

The taxes expired after midnight Friday night when Congress failed to pass legislation to keep the Federal Aviation Administration running.

That gave airlines a choice: They could do nothing – and pass the savings to customers – or they could grab some of the money themselves.

Southwest Airlines and its AirTran subsidiary raised prices by $8 per round trip even if the taxes on the trip would have been more, said spokeswoman Marilee McInnis. She declined to say whether the increase would be rescinded if Congress revives the travel taxes.

The Transportation Department says it will lose $200 million a week. J.P. Morgan analyst Jamie Baker said airlines could take in an extra $25 million a day by raising fares during the tax holiday.


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