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FAA stops collecting airfare taxes -- and the airlines cash in
Recent budget woes in the legislative branch of our US government have been creating a cascade of disruptions, and the most recent hiccup involves the Federal Aviation Administration (FAA). Without proper agreement on a fiscal plan moving forward, the government has been forced to shut down a portion of the agency, most notably the section that collects taxes on our domestic airplane tickets.Those taxes account for a modest percentage of each flight, roughly between 5 and 10%, and when travelers caught wind that the taxes would be discounted, they saw the silver lining of the shutdown as being a temporary sale on domestic tickets.
As planned, the FAA shutdown took place at midnight this morning, but the savings have barely matured. What happened?
Turns out, some of the airlines also realized the gap in price difference and decided to make that up by increasing their fares. So rather than passing the tax savings along to customers, they're greedily taking the margin for themselves.
Not all airlines have reached into our wallets, however, apparently Virgin America has not only refused to increase fares but they've turned the event into a bit of public promotion. Last night the airline had a countdown to tax-free bookings on their sites and as promised, the fares have stayed low. Similarly, United appears to be keeping its fares in place.
On the flip side of the coin? US Airways, American and JetBlue seem to be the leaders in ripping off their consumers. AP has a bit more info if you want to become even more disappointed.
[Flickr image via Fly for Fun]
Reader Comments (Page 4 of 4)
joey Jul 24th 2011 2:51AM
its all about corruption, smoke and mirrors, control the masses... but really, do we need to fly, take a train, drive cross country, see your heritage before you never do again, back to basics, see how it use to be and appreciate what our fore fathers planted for us, you will need a computer for everything soon enough, and jobs are there if you want them, books are now almost rendered useless... don't fly unless its an emergency situation...
kelly Jul 24th 2011 4:20AM
This is the governments way of saying
"Hey airlines, dont push us about TSA pat downs and we will drop taxes and let you gain nice profits okay???"
Does anyone else really "believe" this story?
This is a sham,,, to get the airlines to play TSA touchy feely & body scans....
WAKE UP!!
KEEP PUSHING AIRLINES TO FORCE TSA OUT OF AIRPORTS!!!!
Dan Jul 24th 2011 5:13AM
The problem we have now is that the congress is just posturing for the 2012 election. R vs. D. They are not working together for the country, but for thier own party. They need to get it thru thier heads that the 'party' is over. 'One nation under God' has been lost (morals, values, integrety) now we pay the cost.
Loren Jul 24th 2011 6:24AM
Ok, article makes no sense, even if the collecting agency is shut down evenually the taxes are going to have to be paid. Do you really think that the government is going to just forget about the taxes? Once the collecting agency is back up all back taxes will be due. You still have to file the returns and submit the information. Don't drink this writers coolaid its all bull hockey clearly it has no idea how business taxes are collected and the ramifications of not paying them.
Larry Jul 24th 2011 6:36AM
Republican corruption and fiscal irresponsibility,certainly flows from corporate corruption, relates directly to this situation. It was the GOP run House that failed to pass an FAA budget. Once again it proves the GOP is the party of TREASON since Reagan, the great traitor. It's had a treasonous wing since Stanton allowed Lincoln's assassination and it aided the Nazis before, during, and after WW2. The Bush clan wealth largely comes from aiding the Nazis, even during WW2, and drug running.
The GOP only hypocritically talks fiscal restraint when a Dem is President. They spend like drunken sailors when a GOP is in the WH as most of the national debt accrued under Reagan, and the two Bushs. Tax cuts for corps and the rich are the MOST irresponsible spending policies of all time and have PROVEN time and again to hurt the economy. The great Adam Smith said it best, in 1776, "A goal of taxation should be to relieve inequity of riches as much as possible by relieving the poor and burdening the rich." Keynes is given too much credit for a policy voiced by Smith 150 odd years before.
JohnK Jul 24th 2011 7:13AM
Go to National Debt Clock (look at the real time heading). It's a government site. The numbers increase so fast you can't follow them. At the current rate of spending the debt will be at 15 trillion in 5 months. They are doing NOTHING to curb spending. Use the workforce numbers on the right and do the math to see what unemployment really is. The official number they are giving at 9.1% is really over 10%, the real unemployment number is 17.74%. The Dept. of Labor must be having trouble with math.. I cannot see how the problem is fixable unless we get rid of everyone in Washington, THEY caused this problem. Let the sorry S.O.B.s work for a dollar a year till they fix it. Take away their lifetime salary and special health insurrance program and put them back in the boat with us commoners. We are living in a replica of the old fuedal system of Europe.
j.simpson Jul 24th 2011 7:33AM
The private sector does what it always does, finds a way to "make a buck". cjsim
Jim Jordan Jul 24th 2011 8:19AM
I disagree with most of the comments posted here. We have flown on Air Tran many times to Florida and Georgia and have been treated by the airline with friendliness and a caring attitude. We are happy with their rates and hope they continue as they are - now.
Joel Schleifer Jul 24th 2011 8:54AM
How's this for fiscal responsibily
Stop collecting a dedicated tax
Stretch the air traffic control and regulatory systems thin because ALL government is bad corrupt and just plain incompetent.
When planes start falling out of he sky maybe then you'll wonder why
Paul Jul 24th 2011 8:50AM
Funny how when government gets their greasey fingers out of things businesses can actually make a few dollars and low and behold market competition can bring around lower pricing. Look at the poster that saved $250 this morning. That is money that our socialist leader would have pocketed because after all they know how to spend out money better than we do.
nazztea Jul 24th 2011 9:15AM
In a fiscal move the government decided NOT to collect taxes? wtf?
Kate Jul 24th 2011 9:45AM
Too bad the airlines are so stupid and greedy like all the other corporations in the U.S. This could have been a big PR bonanza and ticket seller for them. Just goes to show you none of the CEOs or the rich have any concern for the "little guy" at all. None of our politicians have a clue about our lives or care no matter what side of the isle they are on.
Dave Jul 24th 2011 9:58AM
Everyone with any since knows that the government ALWAYS gets their taxes no matter what. In this case they will more than likely make all taxes due retroactively so don't expect any discounts from the airlines as they have been there before, just like anything else. Obama needs the money for Michele's vacations and lavish life style she has become accustom to.
Dave Jul 24th 2011 10:05AM
Retalliate! Make your reservations and take the bus the next time! Show those blankety blank airlines that spend a hundred million dollars for an airplane, fuel, insurance, employees, and maintenance that they won't get your $150 if you are not treated like a king and queen!
Larry S Jul 24th 2011 1:02PM
This is trickle-down economic theory in reality - one can eliminate tax but the economic benefit never trickles down. This is why the Bush-era tax cuts should be permitted to expire - largely the benefits never trickled down.
David Jul 24th 2011 1:04PM
The problem is that you have a few idiots flying with you, so you treat all passengers like they are the enemy. All this does is create more hostile passengers. Every job has problems as well as joys, and if you can't balance them you need to look for work elsewhere.
Mildred Fournier Jul 25th 2011 4:54AM
The Spring Cash & Miles only applies if you fly between April 10 and June 9, 2007. Not only that, but all travel that involves the Spring Cash & Miles must be completed by June 12, 2007. The tickets must be purchased no later thanhttp://www.webook.com/member/Dimmisenny May 26, 2007.
2398un Jul 26th 2011 4:05PM
American Airlines is a company treats numerous employees just as rotten as it does its customers -- deceitful and dishonest! Its a company that needs to get rid of its management and treat employees fairly instead of deceiving them. They instruct their employees not to offer information about baggage fees, etc unless specifically asked that question. Why do you think they made so much money in profit? When asked specifically the management denies this, but it was recently all over the news how the airlines hid fees and made a huge profit. They're liars! Do you think the employees just all gained up and decided not to inform passengers about fees unless asked? Their employees are unhappy because many of them are treated like garbage and the newer employees are ripped off big time to pay for the older employees pensions and high pay and benefits plus the managements huge vacations and pay. They're liars and cheats trying hard to hang onto their big bucks while screwing the underlings! Where else can you make $30/hr answering a phone without so much as a high school education? That's why you're getting screwed! And that's not counting the huge vacations and benefits packages. Plus the executives want their big bucks too. The newer employees don't get all extravagance. They're lied to and screwed over everytime they turned around, just like the customers! And the government employees have their airfare paid for with big discounts while soldiers pay regular mostly higher fares. That's American Airlines for you! Rotten to the core! Let's make sure they're forgiven their fines for violations though! It doesn't surprise me that company would screw over customers on the taxes because that's what they do best: Screw their customers!
298yt4h Jul 26th 2011 4:11PM
Let the airlines pay for their own security! Why do the taxpayers have to PAY to protect a business in the US? Give me a break! This is the worst bunch of crooks in business!