Shouldn’t travelers be immune to the sequester? After all, our mandatory travel user fees associated with flying are not dropping. Why are we being threatened with cutbacks in services that we pay for every time we fly, go through security or re-enter the country?
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The airlines, after enjoying two-weeks of collecting what should have been tax revenues, have dropped airfares as the FAA began taxing flights again. To passengers, who may not have been paying attention, it looks like airfares stayed level over the past month. However, for airlines it was a $400 million bonanza.
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Here is the official IRS FAQ page regarding the Lapse of Air Transportation Excise Taxes after July 22, 2011. The Consumer Travel Alliance has sent the IRS a request for the proper procedures for claiming the excise taxes and domestic segment fees for flights taken during this period when no taxes are due.
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Congress is aghast at the display of airline greed. I have just spent two whirlwind days on Capitol Hill and the Congress, both sides of the Hill and from both parties, is surprised at the airlines’ avaricious and rapacious response to the ending of the FAA taxation authority.
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After the demise of the FAA bill extension, most of America’s airlines are keeping the money that they formerly collected as taxes. Almost in concert, the airlines have raised their airfares to match what ticket prices would have been with the 7.5 percent air transportation excise tax and are even taking advantage of the demise of the $3.70 domestic segment fees by raising airfares a further $4 per take-off and landing.
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From the way politicians speak about the transportation federal excise tax, this is a tax paid by the airlines. But reality is quite different. This is a tax completely paid by passengers that is tacked onto the final airfare portion of air transportation. It is in no way paid by the airlines.
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During the past two years, we passengers have been listening to the airlines tell us they are “unbundling” airfares piece by piece. I’ve been listening and have been appalled at their logic. When you take something that is “airfare” and unbundle it, logically its separate parts are still all pieces of the original “airfare.”
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