Airlines Raise Fees As FAA Taxes Go Uncollected

Erika Morphy
Airlines Raise Fees As FAA Taxes Go Uncollected

The one silver lining in what has become an ugly partisan impasse in Washington is the break consumers were to get on airline travel starting last weekend. Briefly, talks have stalemated, along with discussions on you-know-what-else, for an FAA re-authorization bill. This weekend the agency partially shut down operations, including ceasing its collection of federal excise taxes on airline tickets.

Consumers could have gotten a break of $60 or so dollars, and depending on the airline, some did. Virgin America, for instance, went on Facebook to advertise its cheaper flights because of the lost tax.

Frontier Airlines and Alaska Airlines also reportedly kept pricing the same.

Meanwhile, American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue all raised fares just enough so that consumers would still pay the same amount for the ticket, while they pocketed the savings, according to Gannett’s News-Press.

Furthermore, according to the paper, the airlines declined to reassure flyers that they will revert to the lower fares when the tax is back into affect, although in a Reuters report Air Transport Association spokesperson Jean Medina called it a “short term” increase that benefits all stakeholders because it enables the "airlines to invest in their product and service."

This is also a good time to highlight something else Reuters included in its report: namely that U.S. airlines have long complained about taxes and security fees, because it is difficult to pass them along to customers.

Well. Way to be good corporate citizens airline industry.

Pushback

Not to state the obvious, although apparently it must be done: companies, whatever benefit you get by taking advantage of a moment of misfortune through excessive pricing or tacky advertising is not worth the backlash you may be hit with in this era of instant communications and 24-hour news cycles.

In fact you don’t even have to take advantage of an unfortunate event -- just giving the appearance of being greedy with pricing is enough to send consumers over the edge (right, Netflix).

But riding on the back of an event that is disastrous - or will be shortly as in the case of the dysfunction in Washington - is far, far worse in consumers’ eyes.

Consider the heat that:

  • Microsoft took when it launched a Twitter campaign shortly after the devastating natural disasters in Japan earlier this year by linking the aid it was donating to Japan to the number of retweets the Bing brand would get.

  • And that Entenmann's received after it reportedly Tweeted “who's #notguilty about eating all the tasty treats they want?!" when the Casey Anthony verdict was announced.

  • And Microsoft took again when it recently Tweeted after British singer Amy Winehouse's death that fans should remember her by downloading 'Back to Black' at Zune.

  • Government Intervention

    The worst backlash, though, comes from the government and in the case of the new pricing airline pricing schemes, I suspect that this isn’t going to be the last word. Transportation Secretary Transportation Ray LaHood told Reuters he is not happy with the fee increase and plans to continuing speaking with the ATA about it.

    How far he will take it is anyone’s guess. And if you don’t think the government is reluctant to get involved in private market pricing, guess again.

    After years of complaints about cramming -- that is, the surreptitious dinging of customers via mystery charges that range from 99 cents to $19.99 -- the Federal Communications Commission finally got fed up.

    It is working on a new set of rules, it recently said, to protect consumers (although how and against whom these rules will be applied are unclear, but that is another story).

    The airline industry might also  think back to its own history. Several years ago, Kate Hanni, now the founder of the Coalition for an Airline Passengers' Bill of Rights, along with a number of other passengers, was kept on a plane for several hours stalled on the tarmac. She went on to lobby for rules that require airlines to limit the number of hours they can do this to passengers. That rule was finalized earlier this year.

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