2 Airlines’ Ticket-Holders to Reap Excise Tax Savings

American Airlines said Sunday it will pass onto customers savings from the 10% federal excise tax on airline tickets, which expired at midnight Sunday, as the budget battle continues in Washington.

If other airlines follow suit, the effect will be a nationwide 10% cut in domestic air fares.

Although Congress may reinstate the tax, airline and federal officials do not expect it to be retroactive to Jan. 1. “That’s like expecting federal agents to go out and tell smokers retroactively after cigarette excise taxes are increased, ‘Pay us that 18 cents,’ ” said one airline executive.

Concerned about the potential loss of $6 billion in revenue from the tax, the Treasury Department said that the airline travel taxes “should be extended as soon as possible to avoid disruption and confusion by travelers.”

The money raised by the taxes pays for airport construction, air traffic control and other aviation programs. Also slated to expire are a $6 fee for travelers leaving on international trips, and a 6.25% tax on air cargo.

Contacted Friday, other airlines declined to comment on how the expirations would affect fares.

Airline executives are often reluctant to answer questions about pricing plans because of an antitrust suit settled last year in which it was alleged that the airlines improperly shared fare information through their computer reservation systems. Any public discussion of fares before they’re offered to the public is illegal.

“I can’t predict what’s going to happen with fares Monday,” said United Airlines spokesman Joe Hopkins. “We don’t comment on where ticket prices are going until they’re put into the computer.”

Another question is whether passengers who have already paid the tax are entitled to refunds if they travel after the tax expires. American said it intends to reimburse such customers.