A week ago, on January 24, 2011, a new law went into effect that requires airlines and travel companies to include certain taxes and mandatory fees in the listed air fare price. This is one way the airlines can no longer nickel and dime us – or at least they'll be up front about it. For years, airlines have added little fees here and there including fees for checked bags, priority boarding, exit row or bulk head seats, and in-flight meals, things that a decade or two ago you would assume are included in your air fare.
Budget airlines such as Spirit, Jet Blue, and Southwest, used to advertise flights for ridiculously low prices. When you go to book the flight, you soon realize that the actual cost doubled because of taxes and airport fees. In the end, they are often a tiny bit cheaper than mainstream airlines like Delta and American but can't provide the he discounts that they want you to think they can provide. If you see a flight advertised as $120, it had better be $120, not $120 plus federal tax, plus facility charges, plus security fees, plus gasoline surcharges.
In theory, advertising just the base fare price is in line with the rest of the way the American economy works – in almost everything else, we see prices before tax is added. The difference is that airline taxes are a lot more than sales tax and can even vary a lot depending on your destination. In practice, having to click through a couple of pages to see the real price is annoying. Most travelers want to see the final price, including all mandatory fees and taxes, from the beginning.
The new law only requires companies to include mandatory charges in the advertised fares. You can still see the breakdown of the charges and the vast majority of people see this as less misleading. Consumers don't care how you get to the grand total or how the total is divided up between the airline, airports, and government; they just care about what the total is. I'm all for simplifying things and having one all-inclusive price is a step in the right direction. Nonetheless, Spirit Airlines has a giant notice on their website stating: "Warning! New government regulations require us to HIDE taxes in your fares. This is not consumer-friendly or in your best interest. It's wrong and you shouldn't stand for it." Remind me to never fly Spirit Airlines.
Here is the breakdown of a Spirit Airlines flight from Atlanta to NYC-Laguardia for President's Day weekend.
Price 186.28
Fuel 77.82
Facility fee 18.00
Usage fee 33.98
Segment fee 15.20
Security fee 10.00
Unintended consequences of DOT regulations 4.00
Total 345.28
Previously that would have shown up as $93 (for a one-way fare) but now they have to list it as $173.
Compare this to an equivalent ATL-LGA flight in Delta.
Base fare 258.00
Facility fee 9.00
Segment fee 7.60
Security fee 5.00
Total 279.60
Okay, it's not exactly a fare comparison because Spirit doesn't fly directly from Atlanta to New York but Delta does. Nonetheless, you can see how the way Delta previously advertised this flight as $129 (for a one-way flight) is much less misleading than the way Spirit advertised it. What the heck is a usage fee and unintended consequences of DOT regulations? And shouldn't fuel be included in the base fare?
