Airfares appear higher as new advertising rules take effect
If you’re searching for a flight and airfares look higher, it might not be what you think. Sure, fuel costs continue to rise — in United/Continental’s earnings release Thursday, the airline reported that its fuel expense increased 36.5 percent during fiscal year 2011.
But the sudden appearance of a hike in prices has nothing to do with rising costs. Instead, it’s the result of regulations enacted by the Department of Transportation that go into effect today.
The new full-fare advertising rules require airlines to include mandatory government taxes and fees in the initial fare they display, rather than adding them on at the time of purchase. These include:
• 7.5 percent excise tax
• domestic segment tax of $3.70
• passenger facility charge of up to $18
• September 11 security fee of up to $10
Now, when you search for an airline ticket, the quoted price will be more reflective of the actual final cost. It’s an attempt to create greater transparency in the industry, according to the DOT.
“Airline passengers have rights, and they should be able to expect fair and reasonable treatment when booking a trip and when they fly,” U.S. Transportation Secretary Ray LaHood said in a statement released Monday. “The new passenger protections taking effect this week are a continuation of our effort to help air travelers receive the respect they deserve.”
But not everyone involved sees the changes as being in the best interest of the consumer. Spirit Airlines has launched a campaign (and a website, keepmyfareslow.org) against the new regulations, asking customers to contact their elected officials in protest.
“Spirit must now HIDE the government’s taxes and fees in your fares,” the site reads. “If the government can hide taxes in your airfares, then they can carry out their hidden agenda and quietly increase their taxes.”
“And if they can do it to the airline industry, what’s next?” Spirit asks.
In truth, it is a unique situation unseen in other industries. “Hotels advertise a nightly rate for a room, and when you check out, you see the itemized taxes at the end,” said Steve Lott, Vice President of Communications for Airlines for America. “We questioned why this rule was necessary, what their justification was for this change. You don’t see this in any other product or service.”
Yet even though the taxes and fees are now essentially baked into the advertised price, airlines still have the option to provide a breakdown of the surcharges that the government requires. It’s a move that all Airlines for America members have made as they’ve implemented the new rules.
“We believe consumers should always know what they are paying for,” Lott said, “including how much of their ticket prices go to taxes.”