November 2006

Your Airplane Ticket Price
May Not Be What it Seems

“Consumer Checkpoint” readers know that we often zero in on questions posed about the airline industry by consumers. We all know that a number of airlines are experiencing financial difficulty, and it therefore seems a little like piling on when we bring up consumer complaints related to air travel. But rather than address a specific consumer complaint, in this month’s column I want to talk about costs that are often not fully disclosed—for example, in the ads you see in the newspaper trumpeting low ticket prices for fall travel by air. Your plane ticket’s added taxes and fees are costs over which the airlines themselves may have limited control, but you should be aware of them when booking flights.

According to the Ticket Tax Project, the taxes and fees added to the ticket are considerable. For example, the project reviewed 2004 ticket prices and found that the average round trip fare was $268.29, but the added taxes and fees totaled another $44.25, or nearly 16.5 percent more than ticket price. This year, the Air Transport Association, known as ATA, also conducted a study and found that the average passenger paid $200 for a ticket and had $52 in fees and taxes included, or 26 percent of the total cost.

What taxes and fees may be added to your ticket? First, a federal ticket tax of 7.5 percent is added to the base fare and this is used to improve airports. Second, a federal segment tax of $3.30 is added to each segment of your trip. Therefore, if you are flying from Madison with a connection through Detroit, you will pay $13.20 in federal taxes on the round-trip for the four trip segments you fly. This fee helps to fund the Federal Aviation Administration. Third, many airports such as Chicago O’Hare charge a $4.50 “head tax” to finance airport improvement projects. You will pay this fee for every airport you fly through that assesses the fee, but this tax cannot exceed a total of $18. Finally, you will also pay a U.S. security tax of $2.50 for each segment of your trip. This “September 11th” fee cannot exceed a total of $10 and is used to pay for passenger and baggage screening. All told, the fees and taxes may individually not seem large, but they add up very quickly.

If you fly internationally, you will pay even more in taxes and fees. Flying to Great Britain, for example, you will also pay a $14.50 U.S. international departure tax, $24.23 in a United Kingdom air passenger service charge, $37.27 in United Kingdom air passenger duties, a $14.50 U.S. international arrival tax on your return to the U.S., a $5 U.S. customs fee, a $7 U.S. immigration fee, and a $5 U.S. Department of Agriculture inspection fee. Please note every country has its own tax and fee structure, so it pays to check ahead. As you can see, these international fees and taxes can add up to a significant percentage of your total travel cost.

Confused? You are not alone. You can find a list of the taxes and fees on the Air Transport Association’s website: www.airlines.org/economics/taxes