It took about 24 hours, but fares are pretty much back to normal now after Congress reinstated ticket taxes as of midnight Sunday night. What started as a tax holiday for flyers as taxes expired, turned into a windfall for the airlines when most of them raised prices to essentially pocket the taxes. Initially, when the taxes were reinstated fares got even higher, as taxes were being applied to the adjusted fares. Common sense finally prevailed, though, and in the last day most airlines lowered their fares to the same level they were two weeks ago.
Don’t worry, things are pretty much back to where they began, except about $400 million that would normally have gone to the government ended up in the airline coffers. A shout out to Virgin America and Alaska: they didn’t play games with their fares and actually allowed their customers to keep the tax cut savings!
One lingering question that many are asking: what happens to customers who purchased tickets before the taxes ended on July 23rd (so they paid tax) for travel between July 23rd and August 7th when the taxes didn’t apply? It had been widely reported by the media that these passengers might be due a refund. Well, the IRS has nixed that idea, stating that the taxes will be applied retroactively and no refunds will be due.
Meanwhile, the deal Congress reached is only a short term extension through mid-September, so this may not be the end of this saga.