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Air fare tax returns
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March 7, 1997: 9:28 p.m. ET
Most airlines have passed on reimposed 10 percent tax to flyers
From Correspondent Katharine Barrett
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NEW YORK (CNNfn) -- The cost of the average airline ticket got a bit more expensive Friday.
A 10 percent airline ticket tax was reimposed at 12:01 a.m. to upgrade security at the nation's airports and fund other airport improvements. Most airlines in turn have shifted that cost onto their customers.
Not surprisingly, the tax isn't flying well with passengers. Even while the tax was suspended, air fares climbed steadily. What's more airlines are reimposing the tax on travelers even though they didn't give any refund when it expired two months ago.
Just before the tax hit, travel agents say they were flooded with last-minute orders.
"There was a major backlog as far as issuing the documents themselves. Tickets that I had put in last night at 8 p.m. didn't arrive in our printer until this afternoon at approximately 1 p.m.," said Darrell Burns, travel agent at Liberty Travel.
Passengers who had not heard that the tax was being reinstated got an unpleasant surprise.
"I was supposed to go to Los Angeles. It was a $700 ticket and now it's $78 more. I didn't know!" said one passenger.
Others said they didn't like the fact that they didn't know why the tax was being put back on tickets.
"When the government comes in and does something like this, we pay and we don't know why we pay the extra money," said another.
Delta Air Lines, Continental Airlines, U.S. Airways and United Airlines all boosted most fares early Friday.
Candace Browning, airline analyst at Merrill Lynch, said the airlines have definitely been double dipping on the tax issue since they never cut fares when it was suspended. (120K WAV) or (120K AIFF)
While most major carriers are hiking rates, not are all trying to cash in. Northwest Airlines only increased prices 4 percent and Southwest Airlines didn't hike its prices at all.
Analysts say despite the fact that the strong economy has made it easier for airlines to raise prices, this price hike may not stick.
In fact, by late Friday, American Airlines had backed off its plans to increase fares.
Airlines are accustomed to changing their fares with rapid speed. Many already say they will not hike fares on routes where competition is stiff. That's why many analysts say this fare hike could evaporate faster than jet fuel.
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