Southwest Leads Airfare Rollback Following Return Of Taxes

Late last week, when legislators took a vacation from vacation to hammer out a deal that put FAA employees back to work and millions of tax dollars back into federal coffers, a number of you expressed skepticism about predictions that airlines would lower their fares to where they were before the FAA lost its authority to collect taxes. But it looks like all the major airlines have now rolled back their prices over the last two days.

As some insiders predicted, Southwest — including its subsidiary AirTran — the first major to return to the pre-FAA-shutdown levels. That was soon followed by Delta, American, JetBlue, United, Continental and Frontier.

When the FAA could no longer collect taxes on airfares, most airlines decided to raise their prices to make up the difference, meaning consumers saw no noticeable difference in what they paid for tickets but airlines were making a bit more money, about $28 million per day in total.

Had the airlines decided to keep those increases after the taxes went back into effect, the combined amount of the price hike and the taxes would have meant an across the board fare hike of around 10% to consumers.

Before the rollback, analysts predicted that the current low seasonal demand for air travel would not allow the entire industry to keep their prices at that level, it was just a matter of seeing which would cave first.

All major airlines roll back fares to pre-shutdown level [Houston Chronicle]

Airlines begin rolling back fare hikes [Philly.com]