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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Airline lobbying group criticizes TSA portion of budget deal

Airlines are closely watching a proposed budget deal that seems likely become law, saying a possible increase increase in Transportation Security Administration fees is not necessary.

The security fee that airlines collect would go up to $5.60 each way on every ticket. Now, passengers pay $2.50 for each segment, though that fee is capped at $5 for every one-way ticket.

So passengers with non-stop flights would see the biggest increases — from $2.50 to $5.60

“This tax increase which will provide no new benefit whatsoever to travelers comes at a time even when TSA is doing less with more resources,” said John Heimlich, chief economist for industry lobbying group Airlines For America, in a conference call Thursday with reporters. “That is not the direction we would like to see. We would like to see better use of existing tax dollars.”

Then Heimlich shared a slide showing that the TSA’s budget and staff levels have increased even as the number of travelers it serves has decreased.


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Airline industry doesn’t want increase in TSA ticket fees

Airlines for America is not in favor of added airline ticket taxes.

Airlines for America is not in favor of added airline ticket taxes.

Airlines 4 America, the lobbying group representing major airlines, was handing out air sickness bags Monday at Reagan National Airport in Washington, D.C. The reason: The airlines don’t want Congress to add any more taxes to your plane tickets.

According to the group, Congress could increase passenger security fees as part of a new budget deal. That’s a problem, the airline industry says, because it is already considerably taxed. The group’s release says: ” Over the past four decades, the tax burden on a typical $300 round-trip ticket has nearly tripled from $22 to $61.”

Airlines 4 America has created an entire website called Stop Air Tax Now. According to the group:

  • Aviation is subject to 17 different federal taxes and fees, with the industry contributing nearly $19 billion to federal coffers in 2012. 
  • Airlines and passengers paid $2.3 billion in taxes and fees to fund the TSA in 2012, twice as much as the industry paid in 2002.
  • Between 2007 and 2012, the TSA budget rose 19 percent while the number of people screened dropped 11 percent.
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LAX expects to take in $235 million in landing fees in FY ’14

I write a lot about how Los Angeles International Airport doesn’t use any state or local tax dollars, even though it’s a department of the city of Los Angeles.

There are a bunch of reasons for this, and we can get into them in the future. But the airport generates a ton of revenue from all types of sources. And federal law requires that revenue only be used for airport expenses, so none of that money can simply be given to the city.

A big source of revenue is landing fees paid by cargo and passenger airlines.

In its 2014 fiscal year, LAX plans to collect $235 million in landing fees – an increase of about $10 million from the previous year, according to airport records. The 2014 fiscal year starts July 1.

The fees for passenger airlines will be $4.60 for every 1,000 pounds of landing weight starting next month. It’s an increase of 14 cents from the previous year.

You may not think too much of these fees. But when you buy a plane ticket, you’re paying for them indirectly.

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