Deep in the heart of taxes

02-17-2002

One year ago, America's airlines surreptitiously started tacking surcharges on ticket prices to cover the then soaring price of jet fuel. Continental Airlines led the way with an additional $20 levy per round trip, for both domestic and international trips. Late last summer, when the spot market of jet fuel peaked at $1.02 a gallon, they boosted the surcharge to $40.

Now that fuel prices have fallen by more than half, why are surcharges still levied?

American, Delta, Northwest, United and US Airways all collect fuel add-ons. In fact, Southwest is the only domestic carrier that doesn't. All justify the practice by saying they still haven't recovered what they lost when prices soared or who knows when they'll rise again.

These seem to be questionable rationalizations. (It's also worth noting that not all travel companies that implemented fuel surcharges have kept them. Most large hotel chains, for example, have dropped them completely.) To make matters worse, carriers claim they don't collect fuel surcharge on routes that are highly competitive, which means that travelers on less competitive routes are, in effect, subsidizing passengers in busier markets. That hardly seems fair.

Since the fuel surcharges must by law be included in the base fare quote, passengers can make purchase comparisons.

Unfortunately, the price advertised for an airline ticket is not what you will actually pay. Even if you get one of the low-cost fares shown in the adjacent chart, various taxes and fees will substantially increase your final cost.

First, there's a domestic ticket tax of 7.5 percent of the base fare, which finances the operations of the Federal Aviation Administration. So you're actually paying taxes on the fuel surcharge.

Then there's a $3 fee per domestic flight segment, with a maximum of $9 per round trip. Thus, on a nonstop round-trip journey, this fee adds $6 to the cost, while a round trip with connections would cost $9. This money goes to the Aviation Trust Fund, which is earmarked to improve air travel. The fund has something like $8 billion in it, waiting to be allocated.

There are passenger facility charges, basically a fee that goes to each airport you pass through on your journey, whether you take off or land there. That adds $4.50 per airport, with a maximum of $18 per ticket.

On Feb. 1, a third fee of $2.50 per flight segment was added to cover the cost of all that extra security clogging up airports. That involves a maximum charge of $5 each way and $10 round trip.

Since all of these are fixed fees, except for the 7.5 percent tax, you'll have to shell out at least $20 extra for a simple round-trip ticket, and $37 if your journey involves connecting flights, even if you're getting a frequent-flier freebie or last-minute weekend e-saver.

International journeys include these domestic fees and more. There are departure and arrival taxes. For example, the United States charges $12.80 each way. To add insult to injury, each incoming passenger also is assessed $14 for the privilege of entering the country (a $3 agriculture fee, a $5 customs fee and a $6 immigration fee).

And each country you land in will add its own taxes. The International Air Transport Association keeps a long list of these foreign charges, which often have interesting names, such as tourist development tax, alien head tax, noise isolation charge and great manmade river tax.

Many places also charge a departure fee of $15 to $20 per passenger, which often must be paid in cash at the point of exit. Some even tack on an extra airport fee. Since Sept. 11, many foreign carriers have slapped on surcharges to cover extra security and higher insurance costs.

Thus, a recent fare quote for a simple round-trip nonstop flight between Pittsburgh and London was $772, to which taxes and fees added another $81.50, for a total price of $853.50, or nearly 11 percent more than the base quote.

Finally, if you book your ticket through a travel agency, even an online agency, you'll likely pay an additional per-ticket fee.

Unfortunately, about the only way to avoid these extra charges is to not fly at all.

It's also obviously important to keep them in mind when shopping around for flights; otherwise you'll be in for a significant surprise at departure time.

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