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Airline “Tax Holiday” Update

(Via Farecompare)

It looks like most airlines are now using the expiration of several government-mandated airline taxes to raise fares rather than pass the savings on to consumers. As of Monday morning, only Virgin America, Alaska and (as far as I can tell) Spirit have not increased fares to compensate for the taxes they no longer need to charge (roughly 7.5%, though US Airways has apparently only raised about $8). Virgin America could conceivably hold out for a while and use it as a marketing tool (a la Southwest and their lack of checked baggage charges), but I don’t see how Alaska keeps their fares lower.

JP Morgan airline analyst Jamie Baker says that airlines could take in $25 million a day by raising fares to make up for the difference. Who would be crazy enough to leave that on the table?

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  1. “Who would be crazy enough to leave that on the table?”

    Um, Congress?

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