jmw

Did you check them Saturday morning when the tax holiday first became effective? They were cheaper then and then hiked a few hours later to eat the tax holiday. This is a clear case of a points devaluation and cash fares went up relative to Saturday morning. Cash fares should not be going up when demand is literally rock bottom low.

Stop with the economics lesson. We all took the same classes in high school and college.

Now the credit card bloggers are claiming it's not a points devaluation when it clearly is as explained above vs Saturday morning. What a shocker.... More reason not to believe their drivel going forward if they even survive the recession.

lougord99

Wow. I wasn’t clear how anyone could complain about a cross country $49 fare. But I guess it is possible.

NoStressHere

Folks are assuming there are savings to be had.

If they are selling a flight for $240 including taxes, maybe they really needed/wanted to sell if for $260 but the market would not bear it.
Maybe they were selling the ticket at a loss at $240.

Based on current information and flight loads, they really need to sell that seat for $900, but they of course can not do that.

But, now they can still sell it for $240 because the market will handle it, and that is what they need to run the business.

Simple numbers, but to assume that any airline is saving money or capitalizing due the removal of some taxes is a big assumption.

ursine1

The federal bailout package included suspending some of the excise taxes for tickets purchased between March 28 and Dec. 31, to help the airlines struggling financially amid the coronavirus pandemic. Since the feds require air carriers to advertise/list only "all-in" fares (including taxes), the desired net effect would be to convert the amount of those taxes into additional profit for the carrier. That's why the advertised/listed fares did not change. If a carrier wanted to pass on those savings to the passenger, they would need to have lowered the fares advertised/listed by the amount of the taxes. Since the bailout is for the benefit of airlines, not consumers, the base fares were instead increased so that the advertised/listed fare remained constant.

toomanybooks

Yeah, this is the answer. The trip is worth, let's say, $240 to the customer, who cares not a bit whether $1 goes to WN and $239 to the feds, or the reverse. WN will sell for the most it can and keep what it can and that's that. Or go out of business I guess.

Sort of like the argument that the proper level of taxation of corporations and businesses from an economic standpoint is 0%. The customer pays either way in actuality, so why not simplify? Would save a TON of money on accountants and recordkeeping and shifting income to Ireland and lobbying and bribing politicians and all that nonsense if we just taxed businesses and companies at 0% on their gross income and only taxed the money when it came out: payroll, dividends, and capital gains on sale of stock. Put it at a flat rate and be done with it. Plus we would suck in all the capital from the whole world in the process. EVERY business on earth would want to locate here.

lougord99

I think I really like what you just said, except that I have no idea what you just said.

ursine1

Simpler:

Customers used to pay an amount equal to the tax to the government. Now they pay it to Southwest.

NoStressHere

Well said. Simple.

Maybe that should have been a $270 flight, but the airline had to sell at $240 to meet the market.

Really simple stuff folks. WN or SW or SWA or Southwest is not screwing anybody. In fact, they are taking a major hit on revenue. MAJOR.

ursine1

No one is suggesting they're not taking a major hit right now. They're also not screwing anybody. They are, however -- germane to this discussion -- benefiting from the stimulus package in the very specific way of keeping as revenue monies that used to be sent to the government as tax payments. This was intended.