U.S. Airlines Increase Airfare as Lower Federal Taxes on Airline Tickets

The most U.S. airlines had raised fares to reap the benefit of lower federal taxes on airline tickets. A few airlines that were passing the savings on to consumers changed their minds.

Several federal taxes on airline tickets expired over the weekend after Congress failed to pass legislation to keep the Federal Aviation Administration running at full speed.

Raising the fares allows the airlines to charge the consumer the same amount as before, while pocketing money previously collected for the government.

It could turn into a windfall for airlines if the stalemate in Congress drags on. The government estimates that the expiring taxes total $200 million a week. And with jet fuel prices much higher than last year, airlines can use the cash.

As of midday Monday, nearly all large U.S. airlines had raised prices, but fare watchers said Alaska Airlines, Hawaiian Airlines and Spirit Airlines had not. The CEO of Spirit, a small, low-fare outfit that accounts for less than 1 percent of the market, said the industry looked bad.

“The taxes that Spirit and all the other airlines collect don’t belong to us,” Ben Baldanza said. “It’s the taxpayers’ money. It was never Spirit’s money. It would be a grab to take that money.”

Some travel experts called the fare increases a public-relations mistake.

“One of the major airlines could have said, ‘Hey, at least for a week we’re going to give this money back to the consumers,’” said Rick Seaney, who tracks prices as CEO of FareCompare.com. “I’m surprised no one made promotional hay over this.”

Airlines collect various federal fees, including a 7.5 percent tax on all tickets that expired at midnight Friday night. Once the taxes expired, airlines began raising fares by an equal amount. On some tickets, the expired taxes can top 10 percent of the price.

A spokeswoman for the Air Transport Association, a trade group for major U.S. airlines, said consumers will benefit if the tax savings increase airline profits.

“This short-term additional revenue for airlines, which does not mean a fare increase for consumers, benefits all stakeholders — customers, employees and investors — by temporarily improving tiny industry margins to better cover costs and enable airlines to invest in their product and service,” the spokeswoman, Jean Medina, said in an email.

US Airways and American Airlines were the first to raise fares. They were joined quickly by United, Continental, Delta, Southwest, AirTran, JetBlue and Frontier.

Virgin America, which at first bragged about passing the savings on to consumers, changed its mind by Monday. Spokeswoman Abby Lunardini said it was due to “the dynamic nature of fares,” and said lower prices remained on some flights.

Airlines often adjust fares to match competitors, even down to specific routes. For example, Virgin kept lower fares in Seattle, where it competes with Alaska Airlines, which had not raised fares.

George Hobica, founder of travel website airfarewatchdog.com, said stores don’t raise prices during sales-tax holidays, and neither should airlines.

“It seems predatory,” he said. “I realize the airlines have to make money, but this is kind of a cheap shot. It’s tone-deaf.”

Hawaiian Airline Launches Non-stop Flight Service Between Honolulu and Seoul with Business Class

Hawaiian Airlines has launched non-stop flights between Honolulu and Seoul in South Korea.

Seoul is Hawaiian’s first destination on the Asian continent and one of three Asian destinations overall. Hawaiian also currently operates services to Manila in the Philippines and Tokyo.

To celebrate the launch of the new service, there was a pre-flight ceremony at Honolulu International Airport before the aircraft took off for Seoul’s Incheon International Airport. The ceremony took place at the boarding gate with Hawaiian music, a hula performance, and a traditional Hawaiian blessing. Each passenger was given a fresh flower lei before they boarded the aircraft for South Korea.

To attract Korean business travellers and meet their high standards, Hawaiian Airlines is offering a customized service adapted to the Korean culture. Hawaiian will offer pan-Asian cuisine, Korean entertainment and special on-board amenities as well as the usual “Hawaii Starts Here” service, celebrating the natural beauty and culture of Hawaii.

There will be four direct flights per week to Incheon, capitalizing on the growing number of Koreans visiting Hawaii. Hawaiian is offering 54,000 new seats annually with this new service, and it is predicted that 115,000 Koreans will visit Hawaii in 2011.

Flights will depart from Honolulu on Tuesdays, Thursdays, Saturdays and Sundays at 1:20pm, arriving at Incheon International Airport at 8:05pm the following day. The return leg takes off from Incheon on Mondays, Wednesdays, Fridays and Sundays at 10:15pm, arriving in Honolulu at 11:00am the same day.

The aircraft plying the route will be a twin-aisle Boeing 767-300ER, which seats 18 passengers in Business Class, which Hawaiian calls “First Class”. Hawaiian has announced plans to introduce a new and larger Airbus A330-200 aircraft onto the route at a later date. Tickets for the Seoul-Honolulu route are on sale now.

Passengers travelling in Business Class receive premium champagne, wine, beer, selected spirits and other beverages, plus meals with a tapas-style presentation from Chef Beverly Gannon. They can listen to hours of movies, TV and music on their own personal digEplayer with noise cancelling headsets and receive a personalised service from the flight attendants.

Mark Dunkerley, Hawaiian’s president and CEO, stated, “This is another history-making day for Hawaiian as we expand even farther into Asia with our new flights to Seoul and introduce our unique brand of inflight service that promotes the Hawaii travel experience. We are thrilled about flying into Incheon International Airport, which is one of the world’s most modern airports and a major hub for connecting flights throughout Asia.”

Airline Quality Rating, Airline Performance Year 2009 Reached Highest Score

The annual report assessing the performance of the airlines put some of the airlines at the best rating. But the overall performance of both airlines rose by achieving the highest score in the year 2009.

Performance evaluation factors airlines, among others: timely arrival time, service boarding, mishandled baggage and customer complaints.

Fourteen airlines improved their on-time arrival performance in 2009, the report said, though only six airlines had an on-time percentage greater than 80 percent.

Customer complaints fell industrywide to 0.97 per 100,000 passengers, from 1.15 per 100,000 passengers.

The Airline Quality Rating report is a joint research project by Purdue and Wichita State universities. The study is based on figures compiled by the U.S. Department of Transportation.
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Hawaiian Airlines Hires 100 Workers, Plans To Add 170 More

Hawaiian Airlines has hired 100 employees in recent months and plans to add 170 more by early next year to meet the company’s growth needs as it prepares for the first of its new Airbus A330-200 aircraft.
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