Are Proposed Airfare Pricing Changes Transparent - or Clear As Mud?

Proposed bill would allow airlines to advertise base fares minus fees.

May 11, 2014, 9:00 AM
PHOTO: Nervous passenger sitting on airplane
Proposed legislation would allow airlines to display or advertise base airfare minus taxes and fees, but less transparency may make some travelers feel trapped.
Jupiterimages/Getty Images

May 11, 2014— -- Who would have thought the price of a flight to see Aunt Betty in Des Moines could get so political? But it has, with one side claiming it's uncovered an "astounding fact": The government is supposedly withholding vital airfare information from consumers.

Wait, haven't we heard this before? Yes. A couple of years ago, the government sang a similar tune about the taxes and fees on airline tickets, and both sides say the real issue is transparency.

I suspect it has something to do with those amazing $9 airfares, too.

What is the government supposedly hiding? Government-imposed taxes and fees, the ones embedded in every airline ticket or so says the lobbying group Airlines for America which supports the Transparent Airfares Act of 2014. The proposed legislation, officially known as H.R 4156, would allow airlines to display or advertise base airfare as long as they disclose "clearly and separately" taxes and fees, and ultimately provide consumers with a total ticket price.

In other words, let's go back to the days of the asterisk. You remember that; you'd see a fare advertised for $49* and beside the asterisk would be the explanation, "not including taxes and fees." You'd find out what those extras cost somewhere on the way to checkout.

Bottom line: Airlines want to roll-back the Department of Transportation's 2012 Passenger Protections rule which did away with all this, by forcing airlines to display only all-inclusive fares. The DOT sought to protect shoppers from sticker-shock, which might attack upon spying one of Spirit's $9 fares which ultimately cost five or six times that much. So consumers applauded the move because they knew what they had to pay from the get-go.

The airlines response is they're tired of taking all the blame for the high cost of travel when government-imposed taxes and fees are the real culprit (and unlike baggage fees, the government add-ons are not optional). In other words, airlines believe they take 100 percent of the heat on costs but reap just 80 percent of the revenue. What they'd like is the right to display stripped-down base fares and the right to show a separate listing of all ticket taxes and fees elsewhere - maybe not until the end of the transaction, when the total price would be revealed.

I get it. Those taxes and fees really add up. Consider these charges on a connecting flight between San Francisco and Chicago:

• Base airfare: $100 each way• U.S. Sept. 11 Security Fee: $5 each-way• U.S. Passenger Facility Charge: $9.00 each way• U.S. Flight Segment Tax: $8.00 each-way• U.S. Transportation Tax: $7.50 each-way

Which means the $200 round-trip airfare actually costs nearly $260. It's even worse on international flights: Here's the breakdown for a connecting flight from Los Angeles to London:

• Base round-trip airfare: $1,000• U.S. International Departure Tax: $17.50• U.S. Sept. 11 Security Fee: $10• U.S. Passenger Facility Charge: $18• U.S. Agriculture Fee: $5• U.S. Immigration Fee: $7• U.K. Air Passenger Duty: $116• U.K. Passenger Service Charge: $20.70• U.S. International Arrival Tax: $17.50

Add it all up and your $1,000 base airfare morphs into $1,211.70

So the airlines have point. After all, Macy's can advertise a sweater without the tax, but that's not a great example since most of us can calculate that in our heads. A better argument is, how come hotels and rental cars can advertise low prices that balloon dramatically when it's time to pay? A very good question, FTC. Let's fix that!

But I don't think this new legislation is the answer: This relaxation of the rules could be misleading and make apples-to-apples ticket price comparisons nearly impossible.

As for transparency, the proper way to make sure consumers are acutely aware of all the taxes and fees is to require the entire litany to be displayed prominently on the credit card checkout page as well as on each and every boarding pass, and not allow them to be hidden away while consumers are shopping or reviewing an advertisement. But first and foremost, let's see that total ticket price.

Another legislator agrees. The newly introduced "Real Transparency in Airfares Act" would continue the DOT protections, with a twist: Sites that don't advertise total airfare costs up front as currently required could be slammed with a fine of up to $55,000 per day, doubling the current penalty.

Now let me ask you: Would you feel any better knowing your airline ticket would cost less if only it weren't for those darned taxes and fees? Or would you like to know what your ticket will set you back right from the start? I understand why the airlines want us to know about these extras but show us the all-inclusive price too because that's what we have to pay.

The opinions expressed by Rick Seaney are his alone and not those of ABC News.