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This past March, President Obama announced his Fiscal Budget for 2015, which includes a proposal to increase aviation fees and taxes annually by $4.2 billion. Almost two months later, the almost universally unpopular Transparent Airfares Act of 2014 now seems poised to pass into law. This act would void a 2012 Department of Transportation (DOT) ruling called the full-fare advertising rule that requires airlines to include all mandatory taxes and fees in the base price of a flight, and is being championed by the bipartisan House Transportation and Infrastructure Committee, headed by three Republicans (Bill Shuster, Tom Graves and Frank LoBiondo) and three Democrats (Peter DeFazio, Nick J. Rahall, II and Rick Larsen).
This committee argues that full-fare advertising allows the DOT to hide ever-increasing taxes and fees (e.g., TSA security fees, airport facility charges, etc.) from public scrutiny, and subjects the “financially troubled” airline industry (which has actually, in general, recently posted huge profits) to unfair rules not applied to the less heavily federally-regulated car rental and hotel industries – as well as almost any other type of consumer product.
However, as I’ll show with screenshots below, the present process of purchasing airfare is actually relatively transparent, so it seems to me that there’s no good reason for America to revert the full-fare advertising rule in an effort to match the often shady consumer practices of rental car agencies and hotels.
Until the announcement of the budget, this act was being pitched almost exclusively by airline industry lobbyists as an economic stimulus, and fought by consumer rights’ advocacy groups like FlyersRights.org. If the act passes, airlines will be able to quote a price that 15-20% lower than the actual price of a flight (the typical taxes and fees on a ticket), and you’ll only be able to see the full fare at the end of the booking process, right before you pay. The Federal Trade Commission (FTC) calls this sort of practice drip pricing, and is routinely critical of hotels and car rental agencies for engaging in it.
When you reserve a car through an American rental agency, you’re shown a base price that is far lower than what you’ll actually pay. For example, if I want to reserve a Lincoln Navigator through Avis (here for pickup and return to Washington, DC-Dulles (IAD) from May 8-12, 2014), I’m quoted a base price of $679.96, if I want to pay later.
When I choose this option, I’m taken to a screen which shows me that that base price is actually now $156.62 more, thanks to surcharges, fees and taxes.
When I click on the + sign next to “Surcharges & Fees/Taxes,” I’m led to a itemization of these charges. Everything is clearly delineated – except for the taxes.
Booking a room from an American hotel chain is a similar process. As an example, when trying to book a room with two double beds at the Grand Hyatt Washington for May 8-12, 2014, I’m shown a base price of $339 a night.
I’m shown a line that says “Taxes and fees may apply,” and when I click on it, I see that I’ll actually be charged a non-itemized $196.62 in addition to the nightly base price of my room. I’m not shown what the sales tax rate is for Washington, DC (5.75%), just the total amount of sales tax I’ll be paying. It’s up to me to do the math.
My total then, goes from $1,356 for four nights to $1,552.62.
Why Flights Are Different
At present, purchasing a flight is quite different. When you purchase a flight through an airline, you’re quoted a base price up front, then shown taxes and fees as you begin to hone in on the details. For a random example, I looked up a May 8-12, 2014 itinerary between Los Angeles (LAX) and IAD on JetBlue. The lowest fare for my LAX-IAD (non-direct) leg was quoted at $376.
My IAD-LAX return was quoted as $363.
Once I chose both departure and return flights, I was shown my combined base fare of $646.52, plus taxes and fees of $92.48, for a total of $739 – which is what $376 and $363 add up to – so the taxes and fees were already included in the fares being quoted.
Clicking on “Taxes & fees” took me to a screen that itemizes the types of taxes and fees I would be charged, including a US domestic transportation tax of 7.5% of the base fare of travel within the continental US.
That’s not even the worst of it – imagine if this were the case with airlines who charge huge taxes and fuel surcharges like British Airways. For instance – instead of the full $1,239 this roundtrip economy New York-London ticket is quoted at now, after the act’s passage, British Airways could quote you an airfare as low as $539 for it and then hit you with the $700 in additional taxes and fees listed at check out.
So right now, the taxes and fees are required to be bundled into the total prices airlines quote you. What the Transparent Airfares Act of 2014 proposes is selling flights based on their base price, then providing a clearly delineated itemization of all taxes and fees before purchase, ostensibly to level the playing field in other kinds of travel industry fare-advertising. As consumers, we want disclosure, clarity and a healthy airline industry, but perhaps it’s time to take a closer look at the travel industry’s practices as a whole, and ask for full, up-front disclosure of all prices associated with taking a trip.
In my opinion, the push for passage of the Transparent Airfares Act of 2014 is ridiculous and good for no one – except possibly airlines hoping to pull a bait and switch. Even though hotels and rental car agencies are still allowed (for goodness knows what reason) to price gouge this way with hidden taxes and fees tacked on at the end, there’s no reason airlines should be allowed to do the same – especially when taxes and surcharges can vary extremely widely and more than double the price of a ticket.
To show your support for the full-fare advertising rule and opposition to the Transparent Airfares Act, contact your state legislators or visit this page to voice an opinion that will be e-mailed (upon your approval) to your representative in Congress.
You might also want to share information about this issue on social media to raise awareness, using these resources:
What are your thoughts about the possible passing of the Transparent Airfares Act of 2014? Do you feel it’s a step in the wrong directions- at least for consumers?