Should airlines be allowed to advertise fares without including taxes and fees?

Should airlines be allowed to advertised fares that do not include taxes and fees? Screengrab: Kayak.

Should airlines be allowed to advertised fares that do not include taxes and fees? Screengrab: Kayak.

Are you familiar with the Transparent Airfares Act of 2014?

The proposed bill in Congress would allow airlines to go back to the practice of advertising their airfares without taxes. So a carrier could advertise a $99 fare online, but then customers would be hit with additional taxes. The actual ticket would cost a good deal more than the advertised price.

I’m no Washington, D.C. insider, so I can’t tell you if the bill, introduced by Rep. Bill Shuster (R-Penn.) has a chance of becoming law. I do know that Airlines 4 America, the trade group for major airlines, including American, Delta, Southwest and United, supports it.

On April 9, the House Transportation and Infrastructure Committee moved to support the bill.

“We thank Chairman Shuster and Representative DeFazio (D, Ore.) for their leadership in promoting government transparency, protecting customers and holding Washington accountable for the taxes they impose on air travel,” “A4A President and CEO Nicholas E. Calio said a statement after the committee moved the bill.

This would essentially move the industry back to where it was prior to 2012, when the DOT instigated a rule requiring airlines to include all taxes and fees in their advertised fare. The goal then was transparency.

But here’s the airline industry’s argument. It believes it is unfairly taxed, and it argues that current rules hide this fact from the public. The industry gives as an example a $300 airplane ticket. On that ticket, airlines say the consumer pays $61 in federal taxes, or about 20 percent. Because the government has raised the TSA passenger security tax starting in July, that number will soon rise to $63. The airlines also argue that few other industries have similar advertising rules. Other than gas stations, can you name an industry that advertises an all-in-one price?

The airline industry is suggesting that if the public is more aware of these taxes, people might begin to push back against them. Others, however, believe this is part of a ploy among airlines to raise ticket prices. What do you think?

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  • Mark

    As a consumer, I like the clear price you actually pay when researching the cost. The airlines should BOLDLY indicate the breakdown of the ticket costs and the taxes being applied to the ticket. Bottom line is as a customer, I want to simply know what I need to pay so I can compare with other vendors. From a corporate standpoint, the only realistic argument is that the same pricing strategy isn’t applied to all, besides gasoline. The “education” they wish to promote isn’t a priority for the average consumer – taxes are reluctantly inevitable. Are taxes by the government high – yes. Will there be an uprising over this – no. Does that make us sheep — perhaps….as I doubt this is the hill Joe Taxpayer will die on.

    I’d be disappointed to see the ‘pay what you see’ mandate be shelved. I like it.

  • fuzdis

    Sounds like the Airline Lobby will win-out but it’s awful.

    The real issue (for consumers) isn’t the application of tax, it’s the complexity of that application. Sales Tax is readily predictable (9%), easy. I can readily calculate it and compare rates between businesses.

    Airline taxes are not anything like that — the fee structure is so complex that I can’t say, “Okay, that $99 fare is actually going to be $110″ — I have to wait until the end of their sales crap to view the final ticket price.

    That is the scam, that is unfair to consumers and that is why airlines should have to advertise the entire cost. If they really feel they are being unfairly taxed, then they should also advertise how much of the fare is taxed. (or push for a simpler tax)

    I’m sure we’ll all feel as bad for them as they do for us when they lose our luggage and don’t reimburse for those losses.