Thanks, Government, The Airlines Just Raised Fares Another 7.5%

(Thanks to reader IAH-PHX for the heads up on this)

You’ve likely read that the government funded the FAA again, allowing US to once again collect taxes on flights (in fact, those taxes are retroactive, so airlines will not be refunding them. Big props to Gary from View From the Wing for being the only person I saw you suggested from day one that the tax would be applied retroactively.)

You’ll also remember that nearly every airline did not pass the tax savings on to customers (they should not have – that was the correct move). But it now appears that airlines have raised fares again today another 7.5% or so, to reflect the re-instatement of the government taxes. In other words, the government helped the airlines permanently raise fares. I knew airlines wouldn’t pass those original tax savings back to customers, but I didn’t see it coming that they would then, in turn, raise fares when taxes were reinstated. Assuming it sticks, it’s pretty brilliant. Complain all you want, but airlines are burdened by high oil prices and the (obviously) uncertain economy. I don’t begrudge them trying to run their business and take the revenue when they can.

UPDATE: It looks like Southwest is rolling back the 7%.

UPDATE 2: Unless they’re not.

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  1. Remember that fares don’t change in real-time but rather there are several uploads a day during the week, the taxes went back into effect only 10 hours ago so we’ll see what happens to fares beginning a couple of hours from now. They certainly won’t all stay at their previous levels now that the taxes have come back.

    Further, they didn’t ‘raise fares again’ rather the taxes went back into effect and the fares haven’t yet changed, thus the price to consumer is showing up higher.

  2. Aw – and after I gave you a shout out in the post :)

    I believe they could have lowered the fares this morning and didn’t, but we’ll certainly know by this afternoon whether this sticks or not.

    I said they raised them again because they effectively raised the fares by not passing taxes back to passengers (again, a good thing). And then by not backing out the original fare increase. Yes, we only end up 7% or so above the “original” fare, but they had 2 opportunities to lower fares and have not (which is a good thing). Unless, of course, they decide not to keep the fares higher.

  3. There are no such thing as taxes on a business. Only on consumers. Tax increases will always end up out of our pocket one way or the other..

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