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Kip Tips

Air Travelers Not Getting a Tax Holiday

Consumers aren't seeing savings even though the government can't collect taxes on airline tickets.

Apparently airlines aren't as generous as states when it comes to tax holidays (see my guide to state sales-tax holidays).

Congress adjourned July 22 without passing legislation authorizing the Federal Aviation Administration's operating authority, leaving the administration without the ability to collect airline taxes. As a result, airfare experts had expected to see a tax holiday on tickets starting July 23.

FareCompare CEO Rick Seaney posted on his blog July 22 that consumers could expect to save about 15% on new airline ticket purchases.

But most airlines decided not to pass on savings to travelers. Instead, they have raised base fares to offset tax savings. Only Alaska Airlines and Spirit Airlines have not increased ticket prices so far, Seaney wrote on Twitter today.

The government usually collects about $200 million a week in airline taxes, said Transportation Secretary Ray LaHood in a press release.

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