Tuesday, August 7, 2012

Why cheap air tickets are suddenly not so cheap?

When the air industry was desperate to find that extra dollar to tip it from loss into profit, it discovered we passengers were prepared to pay for “services”. This unbundling really hit the big time with the decision to charge us for checking in bags. It’s estimated this generated an additional $3 billion last year. Then airlines decided to levy a penalty if we decided we wanted to cancel and rebook a ticket. Curiously, the domestic airlines only raised $2.4 billion out of that last year. If you add up all the hidden costs from all the airlines around the world it’s estimated they added about $22 billion in additional profit. So what exactly are we now paying for?

You may thought the airlines were just in the people carrying business, but these entrepreneurs have decided they are retailers of seats on airplanes. Everything else is an extra and liable to be charged separately. So do you have a preference as to where you sit, e.g. would you like an aisle seat, do you want priority when it comes to physically getting on to the plane, would you like to use one of the overhead bins for your carry-on bags, if you want to use your computer, do you want a wi-fi connection? And that’s before you ask for a drink of water or, if you’re really feeling brave, something to eat.

All this leads to considerable frustration because, until you go through the process of getting on to the airplane, there’s no way you find out what the total cost of the flight is actually going to be. If you’re trying to work to a budget, this is really annoying. When you’re looking for cheap air tickets, the airlines should be obliged to publish an all-in price. That way, we can all compare like with like to find the cheapest seats. Even more interesting is that the federal taxes are payable on the price of the seat. No taxes are payable on the extra fees. This is a legal tax avoidance scam by the airlines to avoid paying tax on their income. Finding cheap air tickets should not be like this. Booking and billing should be transparent.