Sky still the limit for air carrier fees

Proposed laws, fuel charges may equal higher tickets

By Chris Walsh, Rocky Mountain News (Contact)

Saturday, March 29, 2008

It's the scourge of anyone who's ever tried to book an airline ticket on the Web: You find a great fare for, say, $150, but the price rockets past $200 as you navigate through the booking process.

What gives?

The advertised price often just includes the base fare and initial taxes - before a host of other fees are added into the equation.

Those additional charges, which are filtered to airports, U.S. agencies, foreign governments and sometimes the airlines themselves, have risen sharply in the past decade and can account for anywhere from 10 percent to upward of 50 percent of the ticket price.

Now, federal lawmakers are considering several proposals that would lift the fees even higher.

Those efforts, coupled with recent moves by airlines to hike fares and fuel surcharges, could spark a trend toward higher ticket prices, some experts say.

"I was just looking at a fare for $700 round trip on one site, but then when you actually click through to book it, the price shot up to $1,200," said George Hobica, founder of AirfareWatchdog.com, which compiles information on fare deals for consumers. "This is absolutely a big complaint from consumers, for domestic tickets but especially for international fares. These charges can add hundreds of dollars onto the price."

One government charge - an excise tax - has actually decreased to 7.5 percent, compared with 10 percent in the mid-1990s.

But the other fees assessed by governments and airports, including several new ones such as the Sept. 11, 2001, security charge, have in some cases more than tripled, according to Rocky Mountain News research.

To be sure, taxes and fees can make up a relatively small portion of ticket prices - in some cases as low as 10 percent of the fare.

Destination a factor

Just how much a consumer pays in the end depends on where they're going, which airports they're traveling through and how many connections are involved.

In addition to the 7.5 percent excise tax on domestic fares, travelers pay for everything from up to $10 in Sept. 11 security fees to as much as $18 in airport improvement charges to $15.40 in travel facilities taxes for travel to Hawaii and Alaska.

On top of that, many airlines have introduced a relatively new type of fee called a fuel surcharge, which critics say is simply a marketing tool used to make fare increases more palatable. Carriers have been raising those surcharges in recent months, contributing to six successful broad airfare hikes this year.

It's hard to predict exactly how much the fees will amount to on any given route, experts say.

Airlines and bookings sites typically don't break down charges beyond lumping them all together into "taxes and fees," which often includes a general explanation of what that could include. On domestic flights, fuel surcharges are essentially folded into the base price, while they're often listed separately for international flights.

"It's a secret code, and I'm not even sure I understand what all these charges are and where they're going," said Tom Parsons, who runs travel site BestFares.com.

It's also confusing because some of the charges are percentage-based and others are assessed as a flat fee.

"You end up paying a varying amount of tax. No ticket is the same because of this odd mix of fixed and percentage taxes," said Joakim Karlsson, an airport planning and management professor at Daniel Webster College who is part of a joint project with MIT to analyze airfare taxes. "It can be 10 percent, 15 percent or even 50 percent of the total ticket cost."

The research group released a study in 2006 that found taxes made up about 16 percent of the average domestic ticket price.

Base airfares have gone up since that study, meaning the fixed taxes and fees likely make up a smaller proportion of the overall ticket price, Karlsson said.

Still, the decrease is negligible, and taxes and fees continue to make up 15 percent to 16 percent of the average ticket cost, Karlsson estimates.

Frontier Airlines, for instance, recently offered a nonstop flight between Denver and Washington, D.C., in April for $329.60. The base fare, however, was $279.64. So a passenger who bought that ticket would have paid nearly $50 in taxes and fees, which accounts for 15 percent of the ticket cost.

The add-ons include passenger facility and segment charges, a U.S. excise tax and a Sept. 11 security fee. Throw in a connection each way, and the government charges another $7.

International travelers

Passengers get hit the hardest on flights outside the U.S., where travelers have to pay a host of other charges such as immigration fees and fuel surcharges.

Take a United Airlines flight between Denver and Tokyo for travel next month that was recently selling for $907. The base fare on the ticket was $518, while another $389.60 was tacked on for fuel surcharges, immigration fees and various taxes. In the end, those taxes, fees and surcharges make up 43 percent of the final fare.

"To tell you the truth these charges and taxes aren't that much on domestic fares, at least from my perspective," said Chris Russo, who owns Travel Partners, a travel agency, in Broomfield. "It's the international ones where you really get" dinged.

Those benefiting from the charges say the money is vital. The government, for instance, says the fees help fund critical tasks such as airport security, which is run by the Transportation Security Administration.

Denver International Airport uses the passenger facility charges it gets from travelers for expansion projects and debt repayment. DIA raked in an estimated $97.2 million in passenger facility charges last year, according to the latest available data. That was nearly $4 million more than in 2006, an increase fueled by an overall spike in the number of people flying through DIA. The passenger facility charges also help DIA lower costs for airlines, which can help spur more service, DIA spokesman Jeff Green said.

Airlines, however, see the government taxes as a huge burden. The carriers have opposed attempts in the past to raise those fees and taxes, saying they inflate fares and hurt demand.

"That's why we freak out as an industry when we hear the government talk about raising taxes or fees," said Frontier spokesman Joe Hodas. "We get taxed higher than most (industries). So even adding a dollar to it is a burden."

More hikes sought

Regardless, some groups say government organizations are trying to boost the additional fees.

The Airports Council International - an organization that promotes airport issues - is lobbying to nearly double the cap on passenger facility charges. Under the group's proposal, airports could raise the charge on a round-trip ticket by up to another $12.

The government's Homeland Security agency also is seeking to boost the Sept. 11 fee by 50 cents per segment, which could add $2 more to the price of a ticket. Combined, those two fee hikes would raise the amount of a $200 ticket by 7 percent.

Aside from those moves, airlines fear that entirely new taxes and fees could crop up in the near future.

"Pay attention to the whole issue about the environment," said David Castelveter, a spokesman for the Air Transport Association, which represents numerous airlines. "There could be additional fees tacked on as result of those types of initiatives. In the end it raises the cost of the ticket for the consumer."

walshc@RockyMountainNews.com or 303-954-2744

Other charges

Airfare taxes and fees can vary greatly. Some foreign governments and airports charge more than others, while domestic tickets to Hawaii and Alaska carry an added tax.

On some flights the taxes and fees can account for just 10 percent of the ticket price. On others, particularly international flights, they can easily add up to more than the base fare itself. Beyond that, airlines are starting to charge for services that they used to offer for free, and many nonairline sites charge their own additional booking fee.

Some additional charges that can boost the cost of a flight:

Telephone reservation

You might have to shell out more money - typically around $10 - if you want to make book your ticket over the phone.

Paper ticket fee

Some airlines charge anywhere from $10 to $50 if you want a paper ticket. Almost all tickets are now issued electronically.

Booking charge

Third-party Web sites such as Orbitz and Travelocity work in their own booking and service fees into the cost of the ticket. These can range from $5 to $20 or more.

Checked baggage

United Airlines made waves recently when it announced plans to charge $25 to check a second bag, and Delta Air Lines announced this week that it would follow suit.

Curbside check-in

Several larger carriers now charge a couple bucks to check your bags at the curb with so-called "skycaps." Throw in a tip and a family of four can wind up paying an extra $10 or more.

In-flight meals

Free meals disappeared on most domestic flights long ago. Many carriers now sell sandwiches and snack packs on board, which can set you back between $5 and $10.