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Airlines Make Millions from Expired FAA Taxes

July 29th, 2011 — 8:01am

Airlines make millions from FAA

You might think that since the taxes that the FAA collects on airline tickets went dormant due to the FAA shutdown, travelers might be able to save a few dollars on their tickets. Unfortunately, you’d be wrong. As might be expected, most airlines quietly raised ticket prices to cover the missing taxes. And the result? Consumers pay the same prices for tickets, and airlines are making millions more per day.

How much, exactly? According to the New York Times, The taxes include a 7.5% levy on domestic tickets, $3.70 for each segment of the fight, and a $16.30 tax on international arrivals and departures. In the end, airlines are pocketing an extra $25 – $50 per ticket. Delta is making about $4-$5 million per day from the increased ticket prices, according to USA Today.

By and large the airlines are defending their actions, mostly. Jean Medina, a spokeswoman for the Air Transport Association, the airline industry trade group, said, “Basically, consumers are now paying the same as they did last week.” Glen Hauenstein, Delta’s Executive Vice President for Network Planning, Revenue Management and Marketing says “What the industry has done is simply to maintain prices at market-clearing levels.” What about American Airlines, once of the first airlines to raise their rates? “We adjusted prices so the bottom-line price of a ticket remains the same as it was before… expiration of federal excise taxes,” according to an American Airlines representative.

At least we can rest easy knowing that once the FAA budget gets approved, the rates will drop to make up for the taxes, right? Not so fast. According to the New York Times, “None of the airline industry experts I spoke to expected the airlines to roll back the new fare increases once the taxes are reauthorized.”

What can a traveler do? First, not all airlines raised their fees. Alaska Airlines, Spirit Airlines and a few others haven’t raised their fees. JetBlue did raise their fees at but is offering customers a refund (with a few catches), and now has eliminated the extra fees. We suggest flying through these and other airlines that haven’t raised their rates, and let the airlines that have raised their rates know how you feel! And keep an eye out for when the FAA is back in business – and watch those rates!

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Airlines add Holiday Travel Surcharge

October 8th, 2009 — 7:11pm

For those that thought that airfare price increases would be limited to bag charges, you were wrong. Six airlines (so far!) have added a $10 surcharge to flights that take place on 13 days around Thanksgiving, Christmas and other holidays. The airlines adding the surcharge are American, Delta, Northwest, United, Continental and US Airways. The specific dates for which you will be charged the $10 surcharge are Nov. 29-30, Dec. 19, Dec. 26-27, Jan. 2-3, March 14, March 20-21, March 28, April 11 and May 28.

So what does this mean for your holiday travels? Clearly they’ll cost a little more – a family of four flying over Christmas could rack up an extra $80 in charges. It’s buffered a little this year by the lower costs of airfare due to the recession, but that doesn’t mean anyone will feel any better paying the fee. You can be a little creative with your flights and avoid the fee just by flying on different days. The Christmas surcharge days are Dec. 19, 26, 27, and Jan. 2 and 3 – fly mid-week around Christmas and you’ll avoid the $10 surcharge.

Regardless, it’s another added cost to air travel, and I don’t think this is the last. Now it’s really important to find great travel deals!

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Should You Prepay for Gas With Your Rental Car?

September 28th, 2009 — 7:19am

Prepay for Gas with Rental Cars?

Should you prepay for gas with your rental car? That question has always stymied me a little bit when filling out the paperwork with my rental car. Sure, it’d be easier to not have to find a nearby gas station and do a last-minute top-off when I’m already late for my flight, but gas is expensive – and I don’t want to over-pay by prepaying. In the end, mostly I just don’t want to get scammed. So what’s the best choice?

According to auto rental consultant Neil Abrams, only a small percentage of consumers choose the prepay option. For those that make that choice, they pay a price close to the local price at the pump. If you don’t prepay and you don’t fill the tank before dropping off the car, you’ll be charged a premium for gas – often several dollars or more over the price at the pump at nearby gas stations. Strangely, however, selling gas isn’t a big profit source for rental car companies. With the costs of fuel storage, labor costs, and productivity issues included, there are significant costs in the process of filling gas tanks by the rental car companies. According to another auto rental consultant, Mike Kane, in the end car rental companies price gas the way they do to scare you into doing what they want – return the gas tank full.

So what’s the answer then? In the end, it comes down to what you’re doing with the car – but usually you should turn down the prepay option. If you need a car for limited amount of driving (for example, a long weekend in Las Vegas with a few rounds of golf at different courses), you won’t use enough gas to make prepaying worthwhile. However, if you will be using the car a lot and have an early flight out (and you don’t want to drive around an unfamiliar city looking for a gas station at 4 am), prepay and forget about it. Just make sure that when you return the car the arrow is near the ‘E’!

Comment » | Car Rental

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