pinniped

How? This is the part I don't get. No matter what routes you fly or what your demand profile looks like, you still have the same access to the same product you had yesterday.

Maybe you could argue that Southwest gave the middle finger to a small subset of extremely price-sensitive non-customers who lie barely outside the margin of their existing target audience.

But who cares? They're non-customers and Southwest isn't in an extreme traffic growth mode anymore. They're trying to maximize revenues and profits from a more lucrative target audience.

Taking a look at WN's website, they're doing a lot of things I find appalling and unfriendly. I guess different airlines play different games... But in this case, raising the base fares seems to be the economically logical thing to do.

That's a fair beef, albeit a more general one not specific to WN: I wish all airlines were required to advertise the true, final after-tax price for airfares. I've never been able to click on a "$59" link and buy anything for $59.

jimmychang

Alaska Airlines' Temporary Tax Reductions Ads



Temporary Tax Reductions
Tax Relief Explained
The Aviation Excise Tax expired Friday, July 22, 2011, at midnight. Unlike some of our competitors, Alaska Airlines has not raised fares in connection with the federal taxes that lapsed and we're passing along the savings to you.

For tickets sold beginning July 23, 2011, the following taxes will not be collected:

•The 7.5% tax generally applicable to domestic transportation (as well the 7.5% tax on amounts received from the sale of "frequent flyer miles".)
•The $3.70 domestic segment tax.
•The $16.30 international arrival/departure tax.
•The $8.20 departure tax for flights between Alaska/Hawaii and the mainland US.
The expiration occurs based on the date at the location where the ticket is purchased. Taxes/Fees not specifically mentioned above will continue to apply.

If a ticket was sold when the taxes were in effect, but the travel begins on a date when the taxes are not in effect, the taxes previously paid will be considered an overpayment. The person who paid the tax can request or file a claim for refund with the IRS. The IRS is expected to publish guidance on refund claims as early as Monday.

pinniped

That's nice of Alaska.

But let's be honest: Alaska isn't really going to trigger a Southwest competitive response.

We'd need AA, DL, or UA to make a similar announcement - effectively announcing a systemwide fare sale - for WN to react.

Since the majors were hoping for a fare hike in the past two weeks anyway, with WN refusing to go along, my guess is that the net effect of the temporary tax reduction gets the majors (including WN) to a desirable position - and we won't see one of them initiate a new fare war related to the taxes.

WN, for its part, is clearly telling the market it thinks its fares are optimized right now. They didn't bite on a fare hike 2 weeks ago and they aren't biting on a systemwide reduction right now.

texashoser

Hmmm, it appears some fares are getting the $4 hike rolled back. An outbound fare from AUS-ABQ yesterday was $83, today it's $79.

However, an ABQ-AUS fare that was $180 (had been $176 before this mess) yesterday is still $180 today.

nsx

I believe the rollbacks are only for those seats that are included in the WGA sale. That is, only for those specific markets, dates, and flights. Flights that have no sale fare seats retain the $4 increase.

texashoser

Well, at least that's something...

ftnoob

That was true for the rollback over the weekend, but as best I can tell, not for the example cited by texashoser. HOU and LBB are the only two listed sale cities from AUS for "Don't Let Summer Slip Away Without a Vacation," and the "Great Fare Deals Starting at $59 One-way" offer is not valid for travel prior to 23-Aug.

While last week's sale was still going on, WN tried to push AUS-DEN for the first half of August up to $87 (+PFC), then $91 with the $4 in-lieu-of-tax fee. Meanwhile, F9 was selling those same dates $71 AI. Today WN still has some $69 (not $73) and $91 fares the second week of August, and is down to $67, matching F9, most days through 17-Nov (of course with some weekend and holiday spikes).

texashoser

So in essence, this might be a price-matching thing by WN vs. rolling back the $4 increases for false advertising or simply doing away with the $4 increase.

ftnoob

Yes, if by "this" you mean the AUS-DEN fares. I don't know about the ABQ fares.

dgreen12

Which is why I filed a complaint with the government on this issue.

WN has fixed it for their Spokane-based flights on the fare sale --- we'll see how much it costs them for the false advertising in the meantime.

tbonebkd

According to the IRS if you purchased a ticket prior to 7/22 and fly after the expiration of the tax you are entitled to a refund of the taxes paid. Does anyone know how/if WN is going to do this?

Maybe Southwestgabe or his crew can weigh in.

Here's the link the the IRS Q&A on the expiration of the tax. The info on the refund part is the 5th Q&A down under the 7/27/11 update.

http://www.irs.gov/newsroom/article/...html?portlet=6

alison11

Southwest has finally ended its illegal tax on airline tickets!

Passenger Type Trip Routing Fare Type Base Fare
Govt. Taxes
and Fees
Quantity Total
Adult Depart CLE-BWI Wanna Get Away $59.00 $7.00 1
$66.00 $66.00
Adult Return BWI-CLE Wanna Get Away $59.00 $7.00 1

this is good news

lougord99

A little hyperbole, maybe?

Nothing illegal about their pricing. Exaggeration doesn't fly here.

Nevada1K

On a fare that previously was published as $59.00 before segment tax, PFC and Security Fee, in reality that $59.00 consisted of a base fare of $54.89 and excise taxes of $4.11.

Isn't the excise tax one of the taxes that was deauthorized when the FAA funding bill wasn't passed? If so, then WN is pocketing the $4.11.

iansltx

Yes they are.