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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]

Filed under: Business, Airlines, News

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