Southwest Airlines Co. said Monday it cut fares back to where they were before July 23, when the taxes expired.
A spokesman for Delta Air Lines Inc. said his airline matched the move by Southwest and its AirTran Airways subsidiary. Industry observers said that they expect other airlines to do the same.
If that happens consumers will pay the same total price instead of seeing increases of around 10 percent on many tickets for travel within the U.S.
American Airlines and JetBlue Airways officials said they had lowered fares on some routes — likely those where they compete with Southwest. Representatives for other airlines did not immediately comment.
Most U.S. airlines raised fares last month after a standoff between Republicans and Democrats in Congress on funding for the Federal Aviation Administration caused federal excise taxes on tickets to expire. In effect, the airlines grabbed the money that previously went to the government instead of passing the tax break to consumers.
Last week Congress revived the taxes through Sept. 16. The dispute forced the FAA to furlough 4,000 employees and stop work on airport projects that employed thousands of construction workers.
Bad news for workers was good news for the airlines. By raising fares to offset the expired taxes, airlines were able to pocket an estimated $400 million in just two weeks.
Rick Seaney, CEO of FareCompare.com, said Southwest and AirTran started rolling back the July fare increases on Sunday night and he expected other airlines to quickly do the same. Delta said it matched Southwest on Monday morning.
Tom Parsons, CEO of Bestfares.com, said the weak economy and stock market turmoil could force airlines to do more than just cancel last month's fare hike.
"They have to be concerned over (travel demand in) the fall," he said. "They may still have to bring fares down further."