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Some Airlines to Help Customers to Collect Tax Refunds

August 9th

Certain airlines are now saying that they will process tax refunds owed by the federal government on behalf of their customers. This is due to a Federal Aviation Administration (FAA) shutdown, which is currently expected to continue through September.

The refunds are due to those customers who bought tickets prior to July 22, for travel on or after July 23. This is due to a Congressional debate over budget cuts on July 23, which interfered with the agency’s administration and, therefore, prevented it temporarily from collecting taxes on airline tickets. Though customers who bought tickets after that date did not pay taxes, many airlines did raise prices so that cost remained the same.

The uncollected taxes include the following:

  • A 7.5% tax on the base ticket price
  • A domestic segment tax of $3.70 per segment (each takeoff and landing)
  • An international travel facilities tax of $16.30 per person on flights beginning or ending in the continental United States (taxes are $8.20 for flights that begin or end in Alaska or Hawaii)

All other taxes and fees have been unaffected by this event. They therefore estimate that the average affected traveller will be owed approximately $60 in tax refunds on a $300 round-trip ticket.

During this period the government estimates a total loss of more than $1 billion in uncollected taxes, most of which has gone to the airlines that raised fares to the cost of a standard ticket with tax.

Are There Any Savings For Customers?

Despite most airlines simply raising their prices, some companies remain determined to pass savings during this period on to their customers.

Alaska Airlines and Spirit Airlines have both passed on to customers the amount saved by eliminating taxes. Customers on these airlines have therefore been able to save an estimated $25-$30 each.

Virgin Airlines, which raised fares to compensate for the lack of tax, has even lowered its rate on certain routes where it competes with Alaska Airlines. In particular, these include their flights from Seattle and Mexico.

 
 
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