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Airlines Raise Prices As Federal Tax Expires

The Associate Press is reporting that airlines have raised their fares just a day after a federal tax expired effectively cancelling out a price reduction. According to the AP, “That means instead of passing along the savings, the airlines are pocketing the money while customers pay the same amount as before.”

Did you airline raise their prices? American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue all raised fares, although details sometimes differed. Most of the increases were around 7.5 percent. Don’t worry though. There are a few airlines that are letting you keep your money. Those airlines include Virgin America, Frontier Airlines and Alaska Airlines.

When the Federal government did not renew the charter for the FAA (big whoops guys) the tax that is charged to keep the FAA running also expired. That tax and your potential savings could have added up to $25 on a typical $300 round trip. Airlines could have just left everything along and passed along those savings to you. Instead most of the airlines hoped that you wouldn’t notice and opted to raise fares by that comparable amount. But here’s the dig – the airlines have not said whether they would reduce prices once the tax was reactivated.

Analysts say that airlines could possibly rake in an EXTRA $25 million A DAY with this move. It’s nice to know that on top of no food on airlines, charging your bag to fly with you and selling your lost luggage, airlines are constantly thinking of ways to squeeze more money out of you.

Friendly skies indeed.

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