Breaking: Delta to refund taxes collected during FAA shutdown

There was hope and outcry last week after news broke that as part of its partial shutdown, the FAA wouldn’t be collecting the fees that it assesses against domestic airline tickets. Looking forward to a tax holiday, many travelers started searching for tickets only minutes after the tax break went into effect — only to learn that airlines had raised their ticket prices to wipe out any savingseffectively pocketing the difference in price.

The outrage has slowly been trickling through the media and into the political ranks of our government, most notably in a letter to Delta from Aviation Operations, Safety and Security Subcommittee Chairwoman Maria Cantwell (D-WA) and Chairman John D. (Jay) Rockefeller IV (D-WV).

Believe it or not, the airlines may be listening. Just this afternoon, Delta Air Lines announced that they would be the first major carrier to refund extraneous hikes imposed by the airlines, provided that the IRS puts plans into place. You can read the full release over on their website.

Lets hope that the other airlines make the right decision and follow suit.

update: Delta Corporate communications got in touch to clarify the refunds:

“..what we’re refunding are the taxes customers paid on tickets purchase before the FAA shutdown, for travel during the shutdown period. The IRS has said that customers who travel during this period, who already paid those taxes, were technically overtaxed and may be eligible for a refund. Delta announced yesterday that to help facilitate those refunds, we’ll provide them directly to our customers so that they don’t have to file a claim with the IRS.

[flickr image via Refracted Moments]

Duty free rules, know before you go

Duty Free. It sounds like such a good idea. Duty Free shops and zones in airports and other places common to travelers beckon us to save money . Quick and convenient, we find savings of up to 50 percent just after passing through security on the way to our plane, train or ship. But buyer beware, you may not make it to your final destination with that great deal.

Duty free shop personnel often lack import knowledge for destinations other than their own. They can get you going from where you are, but often laws of other lands will prevent bringing your duty-free items in.

Australian Customs, for example, has a section on duty-free in its ”Know Before You Go” guide for travelers that states: ”If you are aged 18 years or over, you can bring 2.25 litres of alcohol duty-free into Australia with you” – without mentioning that it is subject to regulations about liquids and must be purchased or carried according to strict rules reports the Sydney Morning Herald.

Travelers commonly find out the hard way that security rules concerning liquids vary from country to country. Some require bottles to be in tamper-proof packaging, others don’t. If where you buy and your final destination include a stop in a third country, even a short layover, your duty free purchase could be confiscated.

It’s a good idea to know before you go and online source tells us “Duty-free rules vary by country, with policies ranging from simple and flexible to complex and rigid. To learn about a country’s duty-free laws, try contacting its customs or border patrol agency. Or, call a travel agency, duty-free shop or airline located in that country.”

Catalyst Creative: Duty Free Stores from Catalyst Creative on Vimeo.

Ryanair cuts 1000 jobs and 150 flights over German air tax increase

When the German government recently announced a new tourist tax designed to offset their budget woes, many airlines announced they’d be forced to cut flights and jobs. So far, Irish low cost carrier Ryanair has been the only one to actually deliver on that threat.

Because of the upcoming tax, the airline is reducing its presence at Frankfurt Hahn airport. At the moment, Ryanair operates over 530 flights from Hahn, and will bring that down to 382. In the process, 1000 jobs will be lost. Three of the airlines Boeing 737 aircraft will be moved to other airports in their route network.

From Frankfurt, this also means the loss of routes to Berlin, Prague and Gothenburg. The size of the Ryanair operation in Frankfurt is massive – and this reduction in flights means the airline will handle 1 million fewer passengers a year.

If Ryanair is just the first of German based airlines to make cuts like this, the proposed €8 tourist tax will most likely all go to waste on unemployment benefits for fired workers.

[Photo credit: AFP/Getty Images]

Taxes could make discounted hotels more expensive

If your next hotel stay is more expensive than you expected, blame the government. State and local governments, still reeling from the recession, are looking for any source of revenue they can grab. And, they’re next target seems to be online travel agencies.

Online booking sites, such as Expedia and Orbitz, negotiate a rate with hotels for available inventory, market it up a bit and pass it along to the travel-buying public. The business model is pretty straightforward. The problem comes down to which room rate should be used to calculate state and local occupancy taxes. At least 40 lawsuits have been filed over the issue, as local governments have rewritten ordinances to try to add a bit more to the coffers.

There’s a lot at stake, according to a USA Today report. Approximately $1 billion a year is perceived to be lost by state and local governments.

Yet, is it really lost? The online travel agencies are paying the hotels, and according to Andrew Weinstein, spokesman for the Interactive Travel Services Association:

“Occupancy taxes are based on the rate the hotel sets and receives,” he says, “not the profits, fees or commissions of its partners. … The facilitation fees are no more part of the hotel rate than the taxi that takes the guest from the airport or the tip they give the bellhop.”

How do you feel about this issue? Leave a comment to let us know if it’s what the hotel gets or what the occupant pays that should matter for tax purposes.

[photo by Howdy, I’m H. Michael Karshis via Flickr]

New York to tax travel, the web

New York has been scrambling for tax revenues, and no stone has been left unturned (including my beloved cigars, which are now costing me more than they did a week ago). Well, the Empire State looks like it’s now going after my second passion: travel. Visitors who book hotel rooms on sites like Expedia or Orbitz could get slapped with a higher total price if a proposed tax on lodging booked online goes through.

For a local, it’s pretty tempting to support this measure. I don’t spend a whole lot of time in hotel rooms here, unsurprisingly, because I already have a roof over my head. And, the notion of making out-of-staters shell out for the services I consume is pretty attractive. After all, it’s a net gain for the state – and for me. But, there are two aspects of this proposed travel tax that disturb me.

The first is the usual: higher prices for one sector of the travel booking business create a skewed competitive landscape, imperiling the abilities of several companies to compete and effectively destroying wealth. It’s hard for me to be in favor of that, as a general rule. Also, the higher prices, due to the proposed taxes, could constrain demand and lead to less tourist revenue coming into the city. Like taxes paid by people from out of state, money spent by these people is also a net gain for the state … and it’s ultimately more productive.

So, taxes = bad, spending = good. I know; this isn’t tough stuff.

The other side of this proposed tax is actually more problematic. It’s a tax on web sales, effectively. The web has generally been safe from inane taxation, and I was hoping (more than a little) that it would stay that way. According to the New York Times:

The measure, included in the budget that lawmakers in Albany completed on Tuesday, reclassifies third-party vendors under the tax umbrella of hotel operators, requiring them to collect the same sales tax.

At the moment, travel sites buy hotel rooms from hotel operators at a price that includes the 4 percent state sales tax. They make the rooms available to consumers at a higher price, but no sales tax is collected on the difference in price. The new provision, which takes effect on Sept. 1, eliminates the loophole.

The folks up in Albany expect this violation of the freedom of the internet to be worth $10 million this fiscal year … which seems like an awfully small return on an investment in the deprivation of dignity and freedom – not to mention putting an unnecessary and anti-competitive constraint on the online travel agency business.

Don’t worry, fellow travelers: we want your money in this state so much that litigation seems likely. Says Colin Tooze, vice president for government affairs of the American Society of Travel Agents: “I expect that one or more affected parties will consider litigating.”

[photo by n8kowald via Flickr]