13 Responses

  1. Austin
    Austin at |

    The reason for the proposed rule is that it would apply to advertising (web, print, etc.), not just fares shown when searching in a booking engine.

    It used to be the case that airlines could advertise $69 fares to Florida in big type, typically with an asterisk, and then the smaller type at the bottom would detail that this was exclusive of taxes (which for a domestic flight would add $20-30, obviously a lot more for international flights). However, a few years ago the DOT changed their regulations to require airlines to put the total cost, and not just the fare, in the big type, so what used to be advertised as $69* now has to be advertised in big type as $89.

    The main argument from the airlines (and the members of congress that they influence) is that, at least in the US, any sort of sales or purchase tax on any other product is always calculated after the fact. When you buy something at the store, the price on the sticker doesn’t include sales tax; when you buy a house, the price on the contract doesn’t include transfer taxes. Therefore, why should airlines be singled out in this way?

    Personally, I’d rather move to a European model, where taxes are generally embedded into the displayed price, but given what we have in the US, it wouldn’t be an entirely unreasonable argument but for the fact that aviation taxes are so high compared to other taxes, and it is quite a shock for most people when they find out what the “real” cost of that $69 fare really is.

  2. patricia
    patricia at |

    i’m all in favor of full disclosure up front … airfare advertising is so meaningless talking about “$100 fare to UK” when there’s another $500 in fuel surcharge and $300 in tax

    1. Austin
      Austin at |

      To be fair, even under the old DOT rule, airlines could only put actual government taxes and fees into the fine print; fuel surcharges have always had to be included in the “big type” advertised fare (which is one of the reasons US carriers never bothered to move to the fuel surcharge model of airfare pricing).

      But yes, travel to the UK becomes particularly expensive with regards to taxes and fees, thanks to their enormous air passenger duty; a one-way business class ticket I bought from London to Boston last week shows $223 going to the UK for the air passenger duty, $21 for the LGW passenger service charge, a $17.50 US arrival tax, a $5 APHIS (US agriculture inspection) user fee, a $7 CBP user fee, and a $10 fee I cannot identify (code XP). That’s a total of $313 of taxes and fees on a one-way ticket, for an effective tax rate in the neighborhood of 20% (and this rate would likely be a lot higher on an economy ticket, even though the UK APD is lower for economy class).

      1. HansGolden
        HansGolden at |

        which is one of the reasons US carriers never bothered to move to the fuel surcharge model of airfare pricing

        That’s totally incorrect. US carriers levy huge fuel surcharges.

        1. Austin
          Austin at |

          Yes, you are correct–I should have said that US carriers were late adopters of fuel surcharges compared to their European counterparts. But the main point still holds, in that this is transparent to the end passenger, because US carriers have never been able to list fuel surcharges separately from the base fare, even within the booking engine display. Fuel surcharges are simply a technological solution to a back-end issue (e.g., they exist to make it easier to adjust pricing since they can change a single fuel surcharge rather than every fare as filed with ATPCO).

          For example, look up the same trip on Delta.com and KLM.com, and if you click through the taxes and fees breakdown, KLM lists the fuel surcharge separately from the fare, while Delta includes the fuel surcharge as part of the fare.

          1. Austin
            Austin at |

            You’re right–I must have been originally searching a route without a surcharge. Mea culpa.

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