UPDATE Sunday 7:45am: AP reports all airlines except Alaska, Frontier and Virgin America have raised fares. Only those travelers who acted fast were able to take advantage of the short term discount mentioned below. http://finance.yahoo.com/news/Airlines-are-taking-savings-apf-1533581816.html?x=0&.v=8
Original post from Saturday morning: Due to the budget stalemate in Washington, airlines stopped collecting some federal taxes on airline tickets at 12:01 Saturday morning.
This means that most airline tickets bought from now until there’s a budget agreement in Washington will not be subject to the 7.5% federal excise tax, the $3.50 segment fee, or the $16.30 international departure tax.
For example, travelers booking now will get a savings of $37 on a typical $400 domestic fare.
The higher the fare, the more you save on the federal excise tax. So, let’s say you need to take a quick trip to New York next week and the last minute fare is $1000 round trip– you’ll save $82 on that fare.
While airlines may be price matching soon or already — just raising fares to make up the difference and pocket the windfall– a Virgin America spokesperson confirmed that Virgin has embraced the stalemate, reducing its fares and encouraging travelers via its web site and social media channels to grab a tax-free seat now and “Evade Taxes. Take Flight.”
Alaska Airlines told the Seattle Times that it is not collecting the tax and its customers would save about 14% on ticket prices as a result.
However, a spokesman for Southwest and AirTran said that the carriers have raised roundtrip fares $8 “to offset industry cost pressures.” That means that ticket prices today will be more or less the same as they were yesterday. Also, the Washington Post reports that American and US Airways have raised fares to offset any tax savings. UPDATE: 8:30 pm Saturday– United and Delta have matched the fare increase which it had held off on doing until now. American and US Airways have also raised fares to offset any tax savings.
So if you’ve been sitting on a fence about a fare, now might be a good time to go ahead and bite the bullet– at least on Alaska, Delta, United and Virgin America. But keep an eye on this…as always fares are subject to change!