Tax furlough on tickets- may be time to book!

[oceanseagle12]

For those of you that have been watching prices, this weekend may be time to book. Funding for the FAA, along with the authority of airlines to collect taxes for the federal government, expires at midnight. Congress adjourned without extending it, so this weekend may be a good time to book flights. Just thought I would pass this along. Here are news stories about it:

 

http://www.cnn.com/2011/US/07/22/faa.funding.expiration/index.html?iref=allsearch

http://www.foxnews.com/politics/2011/07/22/faa-headed-for-shutdown-at-midnight-over-congressional-stalemate/?test=latestnews

[oceanseagle12]

What I meant to say, and the articles explain, this means that there will be no tax on airline tickets, at least until Congress reauthorizes the FAA. So prices should be somewhat cheaper- around $60 on a $300 flight.

[BballinQT24]

Thanks for posting this!

[oceanseagle12]

Sure thing. Hopefully some will benefit, and some good will come out of the inability of Congress to get anything done. :)

[oceanseagle12]

So far, application of this is mixed. Apparently, people who are traveling now on tickets that have already been paid will be entitled to a refund.

 

And tickets bought now are not supposed to include tax, but rates have not lowered. It appears that airlines are using this opportunity to raise the base rate and pocket the difference. :mad:

[spongerob]

I think it will be very likely that once the funding is restored, all taxes and fees will be made retroactive.

[klfrodo]

Just bought tickets on AS R/T SEA/STL.

Not only had the price dropped by about $5 - $10 from last night,,,the taxes had dropped by $20

[oceanseagle12]

That could all be tax that dropped. The base price that we ordinarily see includes a 7.5% excise tax. Either way, it is good to hear that at least some prices have gone down.

[frugaltravel]

What I meant to say, and the articles explain, this means that there will be no tax on airline tickets, at least until Congress reauthorizes the FAA. So prices should be somewhat cheaper- around $60 on a $300 flight.

 

Misinformation as you already found out. Only certain taxes, including the 7.5% tax, the "ZP" taxes, the US arrival/departure tax of $16.40 each way and a couple of other minor ones are/should be gone.

 

So far, application of this is mixed. Apparently, people who are traveling now on tickets that have already been paid will be entitled to a refund.

 

True, but the refund has to come from the IRS, not from the airlines, per a precedent set by the courts the last time this happened in the 1990's. All I can say is "good luck!"

 

And tickets bought now are not supposed to include tax, but rates have not lowered. It appears that airlines are using this opportunity to raise the base rate and pocket the difference.

 

Untrue as a blanket statement. Many reports of lower fares and/or the same base fare just less in taxes.

[luv2sail7]

the following taxes are impacted:

* the 7.5% tax generally applicable to us domestic transportation

* the $3.70 us domestic segment tax

* the $16.30 us international arrival/departure tax

* the $8.20 us departure tax for flights between alaska/hawaii

and the mainland us.

 

 

[oceanseagle12]

Misinformation as you already found out. Only certain taxes, including the 7.5% tax, the "ZP" taxes, the US arrival/departure tax of $16.40 each way and a couple of other minor ones are/should be gone.

 

 

 

True, but the refund has to come from the IRS, not from the airlines, per a precedent set by the courts the last time this happened in the 1990's. All I can say is "good luck!"

 

 

 

Untrue as a blanket statement. Many reports of lower fares and/or the same base fare just less in taxes.

 

Was that fun?

 

On the last note, you're correct. I didn't intend the blanket statement- that is why I started it out with saying that the result was mixed. I should have been more concise with the rest of what I said. Although did you notice the word "appears"?

 

On the statement about taxes. Again, perhaps I could have been more clear, but I think (meaning I might be wrong) the ones that still apply are not considered as a tax- they are fees. I know from a consumer perspective, they are one in the same. But legally they are different. Hence, the different application now.

 

Regardless, my initial point was to give people a heads up that they MAY be able to book now and same some money. But thanks for your attention to detail. :rolleyes:

[oceanseagle12]

breakdown of which airlines are passing the savings along, and which are pocketing the difference:

 

http://blog.seattlepi.com/airlinereporter/2011/07/23/faa-taxes-go-away-which-airlines-are-passing-the-savings-to-customers/

[tcneal]

FYI, I just bought 4 tickets on Continental for a cruise in Mar over spring break. I was checking before the weekend, so I know the airfare didn't increase and I did not pay taxes. It was a ridiculously low price for Spring Break.

 

BTW, I was monitoring other airlines (Delta, UA, AA) and most did not increase so I have a different experience from what the article reported.

[smeyer418]

http://news.yahoo.com/flyers-may-not-see-savings-expired-taxes-185327278.html

 

reports that AA and USAir increased the fares in the same amount as the ended tax...

 

so much for the cutting tax theory of saving people money....

[oceanseagle12]

I'm not so sure. The excise tax is reported in the base fare- the law essentially requires this. So if the fare you see didn't change, then they are actually increasing their base fare. For example, here is the pricing on the ticket I booked last week, which I have been monitoring daily:

 

Fare: $461

Additional Taxes and Fees: $19.90

Total: $480.90

 

The exact same itinerary now shows:

Fare: $468.40

Additional Taxes and Fees: $12.50

Total: $480.90

 

So, you clearly see the $7.40 swing between taxes and fare. This makes it look like the fare only increased by $7.40, but that is deceptive:

 

The first fare includes the excise tax of 7.5%, which in this case works out to be approximately $32. The second fare has no excise tax, so all of that money is going to American. The net result is they are pocketing an addition $40 per ticket. (The numbers are going to be different for each ticket, but the concept is the same)

 

So I am surprised if you are seeing different bottom line price, especially for AA. I can't speak to the others, but I suspect that the others reported in the article are doing the same thing.

[frugaltravel]

Most airlines have raised fares so that in effect they pocket the difference, vs. giving it to consumers:

 

http://news.yahoo.com/airlines-taking-savings-expired-taxes-000011731.html

 

A couple of interesting notes in that article that will make some on this forum howl "foul" :D - -

 

"Southwest Airlines and its AirTran subsidiary raised prices by $8 per round trip, said spokeswoman Marilee McInnis.

 

"Southwest's price hike gave valuable cover to other airlines. Southwest carries more U.S. passengers than anyone, and it effectively sets rates on many routes. Southwest torpedoed attempts by other airlines to raise prices in the last two weeks."

 

Heresy!!

[kenish]

I put an AA reservation on hold Friday and purchased yesterday. The total did not change, but the fare increased to make up for the reduction in taxes. Either AA (and others) are pocketing the difference, or they are putting the amount in reserve in case the goverment ends up being able to retroactively collect the tax. If the tax is never collected later I already know I won't see a rebate......

 

FYI, JetBlue is not collecting the tax or increasing fares and they have instructed passengers who already paid to standby for further details.

[oceanseagle12]

I put an AA reservation on hold Friday and purchased yesterday. The total did not change, but the fare increased to make up for the reduction in taxes. Either AA (and others) are pocketing the difference, or they are putting the amount in reserve in case the goverment ends up being able to retroactively collect the tax. If the tax is never collected later I already know I won't see a rebate......

 

FYI, JetBlue is not collecting the tax or increasing fares and they have instructed passengers who already paid to standby for further details.

 

It is pretty safe to say that they are pocketing the difference, considering that they have said so publicly. :mad: