San Francisco, CA – As of July 23, airlines are no longer required to collect Federal Aviation Administration (FAA) administrated taxes from passengers, after Congress failed to pass legislation to keep the FAA running. On domestic tickets, airlines automatically charged a 7.5% federal excise tax plus a $3.70 per segment flat fee. For international flights, airlines collected an additional arrival and departure federal tax of $16.30. Both will no longer be collected by airlines.
The expired legislation can mean $25 or more in savings for a typical $300 round-trip air ticket. Yet most consumers will never see those savings. Nearly all U.S. airlines chose to raise prices so that customers pay the same as before while airlines pocket the difference in fares.
“Most airlines saw an opportunity to get more money, and went for it” said Jon Fox, consumer advocate with CALPIRG, adding that “We recommend consumers look out for the airlines that instead chose to pass along the savings to consumers.”
While airlines may choose to raise prices at their own discretion, what they cannot do is keep federal taxes collected in advance. Travelers who bought an airline ticket before July 22, 2011 and are flying in the coming days (or until the taxes are reinstated) are entitled to a refund.
Jon Fox explained that the airlines and the Internal Revenue Service are currently shifting responsibility between each other over who consumers should call to request a refund for voided taxes already paid for.
“Right now the IRS and the airlines are pointing fingers rather than giving consumers a clear answer on where they should turn to get their refund.The IRS and the airlines should make it clear and easy for consumers to get any refunds they are entitled to” said Jon Fox.
The California Public Interest Research Group (CALPIRG) is a result-oriented public interest group that protects consumers, encourages a fair sustainable economy, and fosters responsive democratic governance.