Originally Posted by
sethb
It would either raise fares by the amount of the tax, or by a ratio of the reduced number of seats.
While as a general rule, it's safe to say that at least some of the cost would get passed onto consumers in most cases, the above is hugely oversimplified.
Major quibbles:
* There's no one single "fare," but several-to-many buckets of fares for any given flight.
* Any one of the fares on a given flight is already the airline's best guess (within the limit of the time and tools available to their revenue management team) of either what the market will bear, or enough under it to generate a certain level of demand at a certain point in advance.
* In either case, if the airline attempts to pass the costs on to passengers, it will impact demand. Whether on the net, increasing prices increases revenues will depend on the particular routes. Of course, unless the tax is tied directly to the ticket, the airlines don't have to link their price increases to the actual underlying cost on any given seat.
* If the airlines remove seats, it will impact supply. It increases marginal cost per seat (although less than linearly; reduced weight, more free cargo volume, and fewer empty seats will make up
somewhat of the difference.) OTOH, different routes and different fares will have very different responses to changed supply.
Overall, I don't think it's readily predictable (at least coming in from the outside, without access to airlines' internal revenue modeling) how much of the added cost would get passed on vs. come out of profits, nor how that cost would be distributed around routes/fare classes.