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Strategies for Minimizing the TSA Fee Hike

by on July 14, 2014 · 10 comments

in American Express, Arrival Plus, Capital One, Chase, Family Travel, Ritz-Carlton, Southwest, TPG Contributors, TSA

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Today, TPG contributor Jason Steele looks at ways to mitigate the increased TSA security fees set to begin next week.

As TPG reported recently, the TSA will soon be raising its fees, making airfare more expensive. The current fee is $2.50 per leg, with a cap of $5 per one-way trip or $10 per round trip. Beginning on Monday July 21, 2014, the charge will increase to $5.60 per leg with no cap. Domestic layovers longer than 4 hours and international layovers longer than 12 hours will count as a separate leg, which means a separate fee will be added.

Some people might be thinking that an extra few dollars doesn’t sound like a big deal compared to the price of airfare, but the costs can add up quickly, especially for families. For example, our family of four regularly flies on Southwest Airlines, typically on non-stop flights to our destination. We currently have pay $2.50 out of pocket, per person, each way, for a total of $20. We pay these fees out of pocket, even though we book two flight wards with points, and use our two companion passes for the other two (see: Family Travel Tips for the Southwest Companion Pass).

Starting on July 21st, our total cost per trip will soar more than 100% to $44.80. If we take four family trips each year, we would be spending $179.20 on TSA fees each year for our award travel. I estimate that this is about the cost of paying 10 TSA employees to stand around doing nothing for an hour, but it’s real money to our family.

Clearly the TSA has foiled another attack. Image courtesy of Shutterstock.

Clearly the TSA has foiled another attack. (Image courtesy of Shutterstock)

When you’re traveling on a family budget, every dollar saved helps, so let’s look at ways travelers can reduce or eliminate the impact of these fees on their budget:

1. Book before July 21st. This new fee hike only affects travel booked on or after Monday, July 21st. So if you have travel plans and are ready to book, you can buy tickets now for travel after the 21st, and still pay the old rates.

2. Use credit card airline fee credits. Some credit cards offer statement credits towards airline fees. For example, the American Express Platinum card comes with a $200 annual airline fee credit, while the The Ritz-Carlton Rewards credit card from Chase comes with a $300 annual travel credit. The fees eligible for reimbursement include anything not associated with a ticket, such as baggage fees, seat assignment fees, and charges for in-flight food and entertainment. However, since TSA charges are associated with a ticket, these fee credits will not apply. The workaround is to use the fee credits to purchase airline gift cards, which can then be used to pay the fee. That’s how my family paid for its TSA fees last year.

3. Purchase discounted gift cards. Since you can use gift cards to pay for taxes and fees, you can save money by purchasing airline gift cards, even without a card that offers an annual fee credit. Airline gift cards can be purchased on the secondary market at a discount, and are sometimes discounted directly during promotions. Furthermore, several supermarkets and office supply stores sell these gift cards, so if you can’t purchase them at a discount, you can at least earn additional bonus points or miles by using a card with a good category bonus, like the Chase Ink Bold, which offers 5 Ultimate Rewards points per dollar spent at office supply stores.

The new TSA fee hike can be costly. Image courtesy of Shutterstock.

The new TSA fee hike can be costly. (Image courtesy of Shutterstock)

4. Use credit cards that offer travel statement credits. The Capital One Venture Rewards card, the Barclaycard Arrival Plus World Mastercard, and the Barclaycard Arrival all offer rewards in the form of statement credits towards travel expenses such as airfare. Even when you redeem frequent flier points or miles for an award flight, you’ll still have the TSA fee that you can charge to your credit card account for a travel statement credit. Although these charges are small, they’re coded as airfare and are eligible for reimbursement. Both the Capital One Venture Rewards card and the Barclaycard Arrival Plus offer double miles on all purchases, and each mile is worth one cent when redeemed for statement credits, though the Arrival Plus gives an extra 10% refund for points used on travel expenses.

5. Use airline vouchers. Have you ever received poor service from an airline? Right, who hasn’t? When a complaint is warranted, consider taking the time to report such service failures (using the airline’s website or through social media). You will often receive a small voucher that can be applied to your next flight. The airline probably figures that issuing you a $50 voucher just serves as a discount off the price of your next ticket, which encourages you to remain a customer. Instead, you can apply these vouchers to the taxes and fees imposed on your award tickets. (In fairness, I also advocate recognizing airline employees who provide excellent service.)

Those blue rubber gloves aren't cheap. Image courtesy of Shutterstock.

Those blue rubber gloves aren’t cheap. (Image courtesy of Shutterstock)

6. Avoid layovers longer than 4 hours. One of the quirks of this new fee structure is that the TSA now considers itineraries with layovers of more than 4 hours to be separate flights, and they will collect the fee multiple times. Not that many of you are out there hunting for long layovers,  but if all else is equal, you’ll have extra incentive to keep your layovers under the cutoff. For instance, a family of four choosing between two nearly similar itineraries, one with a layover just over four hours and one with a layover just under, would save nearly $25 with the slightly shorter option.

7. Consider other forms of transportation. I’m not going to convince anyone to avoid air travel to save a few dollars, but there are times where an extra $50 in fees could make the difference between a family booking a short award flight, or just taking the train. For example, there are no TSA fees when booking a trip on Amtrak, whether you pay with dollars or points. Furthermore, there are next generation bus services like MegaBus that offer low fares comparable to the TSA fee alone.

Do you have strategies for dealing with TSA fees? Please share your ideas and questions in the comment below.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Jennifer

    In your example of the fee increase, it is going up more than 100% not 50%. It is more than doubling.

  • Sam

    Tell the Federal government you are against this hike: http://boingboing.net/2014/07/09/have-your-say-on-tsa-tax-hike.html

  • globetrotter

    Can you redeem airline gift cards to pay taxes for either revenue ticket or award booking? I tried to do it with AA, unsure which one at the time, but the agent said I could not. I am still sitting on the AA gift card for two years now.

  • http://www.jasonsteele.com/ Jason Steele

    I have done so with several airlines. Could you try placing the ticket on hold and paying online?

  • PatMcPSU

    Not to get too political, but the TSA has always operated at a loss and, even charging the new amounts, they still project to operate at a loss. They are charging $4.60 for a few minutes worth of “service” and still won’t be able to cover their own costs. The inefficiency is astounding.

  • Gabriel C

    has TSA ever considered a possible discount for Global-Entry holders?

  • Bryan C

    This statement is incorrect: ” the charge will increase to $5.60 per leg with no cap”. The new fee will be $5.60 per one-way trip. Layovers in the continental US over 4 hours will be considered a separate one-way trip. So if you have 3 legs in a one-way trip with no layovers over 4 hours, the increase is only 60 cents. For a non-stop flight, the increase is $3.10 or a whopping 124%.

  • Ninja

    Just wanted to point out that even though its called the TSA fee, this increase does not go to TSA. Congress is grabbing this for some other noble effort :(

  • MC

    Only 1 and 6 seem to be related to the TSA fee issue

  • BobChi

    This is an important point. The money does NOT go to the TSA; it goes to the general treasury. Any increases in TSA funding would be a separate act of Congress. This is simply Congress and the Administration saying that we are going to tax air travel again because it’s politically easier than increasing other kinds of taxes. It was part of the budget deal to end the last government shutdown. But we keep electing these people, so who is to blame?

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