Senators Blast Airlines For Profiteering During Tax Holiday

Naughty, naughty. Senators Jay Rockefeller and Maria Cantwell are wagging the fingesr at airlines for raising airfares during the tax holiday that has resulted from the Federal Aviation Administration’s shutdown. The practice could have “long-term negative repercussions for the industry,” said the senators in a letter sent to the airlines on Tuesday.

The bark carries some bite. Rockefeller and Cantwell are chairs of the committee that has oversight over the FAA budget, and the aviation subcommittee, respectively.

After a budgetary impasses climaxed on Friday, the FAA’s ability to collect taxes from passengers expired. It won’t be reinstated until the FAA’s budget is. However, most airlines, rather than reduce ticket price to reflect the fact that they no longer had to charge for Federal taxes, chose instead to raise prices to roughly the same amount that would have been charged if the taxes were there. They hid the fact that they didn’t have to charge the taxes, and pocketed the money.

The AP reports the letter asked the airlines to either put the scooped profits into an escrow account to support government aviation programs or to undo the fare hikes.

Meanwhile, some airlines are turning their decision not to artificially raise fares into a competitive advantage. Alaska Airlines is running a big box on their website that says, “Temporary Tax Relief. For a limited time, take advantage of our low cares & NO federal excise taxes.”

Senators scold airlines for raising fares [AP]
FAA Loses $30 Million a Day as Tax-Collecting Powers Lapse [Bloomberg]

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