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 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 between two points
on a given airline. 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 ( 2) 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
BY CLIFFORD F. LYNCH fastlane
How do you spell transparent?
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,
Airlines have found
that the road to profit-
ability 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 conse-
quences of DOT regulations.”
I will leave it to the reader to decide
which method is “free from pretense and
deceit.”
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.
