May 5, 2014
Column | fastlane

How do you spell transparent?

Note to air travelers: The proposed Transparent Airfares Act of 2014 is anything but.

By Clifford F. Lynch

Merriam-Webster's Dictionary defines transparent as "honest and open; not secretive; free from pretense and deceit." Keep this in mind as you consider the following story about events taking place in the air transport world.

Since Jan. 26, 2012, the U.S. Department of Transportation (DOT) has required airlines to post total airfares on their websites and in their promotional materials. This has been something of a double-edged sword for the consumer. On the one hand, this lets prospective passengers know exactly what they will be paying for a ticket on a given airline between two points. All fees are included. On the other hand, the precise amounts of the government fees, taxes, and other charges are hidden. Still, to the average traveler, I believe this is the preferable method of pricing. If you are taking the family to Disney World, you just want to know how much it's going to cost you - total. It is something akin to buying gas for your car. While I may have some academic interest in the amount of the fuel taxes, I really only care about what a particular station is charging per gallon.

Fast forward to March 6, 2014. On that day, the Transparent Airfares Act of 2014 was introduced in Congress (H.R 4156). This bill "declares that it shall not be an unfair or deceptive practice for an air carrier or covered entity to state the base airfare in an advertisement or solicitation for passenger air transportation if it clearly and separately discloses (1) the government-imposed taxes and fees for the air transportation and its total cost." In other words, if this bill becomes law, an airline can advertise the base fare, then when the time to pay arrives, add various taxes and fees.

Using a current example, if I want to travel from Memphis, Tenn., to Jacksonville, Fla., on June 30, returning on July 2, the advertised airfare is $740.50, including applicable taxes and fees. Under the provisions of H.R. 4156, Delta could advertise the fare as $652.09, and when I'm ready to confirm the purchase, I will learn there are several "gotchas."

Since a roundtrip from Memphis to Jacksonville requires an aircraft change in Atlanta, the trip will involve four segments and incur 12 different taxes and fees. First, there is the federal tax of $48.91. Then, there is the Sept. 11th Security Fee. There are four of these, at $2.50 each. Each segment has a Flight Segment Tax of $4, and finally, there are three U.S. Passenger Facility Charges of $4.50, for a total of $88.41 or almost 14 percent, to be added to the base fare. This, of course, does not include charges for checked baggage, room for both legs, and moisturized turkey sandwiches. And heaven help you if you have a last-minute change in your plans.

Airlines have found that the road to profitability is through their various fees, and under the proposed pricing scheme, comparisons in trip costs will be much more difficult than they are today. A quick look at the website of one of the more fee-dependent airlines, Spirit, reveals that a trip from Dallas to Miami has a base fare of $117, but adding such nonoptional fees as those for fuel costs, carry-on baggage, and other services results in a total price of $188, or 60 percent more than the base fare. Spirit even has a charge for "unintended consequences of DOT regulations."

I will leave it to the reader to decide which method is "free from pretense and deceit."

About the Author

Clifford F. Lynch
Columnist
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at cliff@cflynch.com.

More articles by Clifford F. Lynch

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