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Consumer

3-On Your Side: Airlines Keep Tax Savings

Money
jim-donovan-web Jim Donovan
Jim Donovan is a 13-time Emmy Award-winning consumer reporter w...
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WASHINGTON (CBS) – The political stalemate in Washington has left airlines unable to charge many taxes. You’d think that would be good news for travelers as it should make tickets cheaper.

But as 3-On Your Side consumer reporter Jim Donovan explains, most airlines are benefiting more than their passengers.

Several federal taxes on airline tickets expired over the weekend after Congress failed to pass legislation to keep the federal aviation administration running at full speed.

Those taxes amount to around $200 million dollars a week!

With the FAA now unable to collect them, you’d expect to see the price of an airline ticket to drop by about $25 to $50.

Instead, most airlines have seized an opening to increase airfares.

“They’re charging the public for a tax that doesn’t exist,” said Transportation Secretary Ray LaHood.

LaHood says many carriers have merely boosted ticket prices and are pocketing the money that would have gone for the taxes.

“Every airline except one made money last year because of baggage fees, because of pillow fees, because of blanket fees, because of food fees. And what I’ve said to the Airline Association is you need to start thinking about the customer,” said LaHood.

A handful of airlines including Alaska Air, Spirit and Hawaiian are passing savings along to consumers.

One travel expert believes those airlines that haven’t will eventually have to change course.

“My guess is going into the fall season, which is a little bit softer, they would almost be forced to drop their airfare prices back down,” said Rick Seaney with FareCompare.com

Meanwhile most experts believe Congress isn’t going to revisit the issue of the FAA until they resolve the larger dispute over the federal debt ceiling.

Reported by Jim Donovan, CBS 3

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