Get Ready for More Airline Ticket Fees
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What is the main topic discussed in this episode?
This is Your Money Matters from The Wall Street Journal. Welcome to Your Money Matters. I'm J.R. Whalen in New York. The price of a round-trip airline ticket could be on the rise. But don't blame the airlines this time.
Why are airports pushing to add new fees to airline tickets?
Blame the airports. Wall Street Journal news editor Susan Carey joins us from our Chicago bureau to explain. So Susan, why do the airports want to add to airline ticket fees?
We have Many, many old airports in the U.S., the average age of an airport is 40 years old, and they are contending with exploding numbers of passengers, and therefore the airports need to, you know, build new concourses and... refurbish things and improve the roadways and all of these things, and they don't see federal infrastructure dollars paying for everything. So they are trying to grab onto a fee.
Okay. And how much of a fee are we talking about in this proposal that could be added onto tickets?
How much could the proposed airport passenger fee increase ticket costs?
Well, currently, this fee is capped at $18, and that would include a $4.50 fee for four legs of a journey. Under the proposal, that is not yet certain that it will end up being the law, the fee would go up to a maximum of $26, with two of the four legs increasing to $850 from $450.
So it really depends upon how many segments of a trip a passenger has, and that's how much money the airport would collect?
No, the maximum this particular charge allows is on four segments on an itinerary. So it could only be on four flights. If you're going on ten flights on one itinerary, you're only going to be paying this fee on four of those flights.
And the airports are concerned that a tax break they currently enjoy could go away under the Republican tax proposal.
How would the fee be applied across multiple flight segments?
So they're trying to see if they can collect this additional money as quickly as they can.
Yes, they've been pushing for an increase in this particular charge for years, and this would be the first time it was raised in 17 years. Airports obviously get a lot of revenue in other ways. They get revenue from airlines' landing fees and airline office rents in their buildings. They get money from restaurants and shop concessions. They get a slice of that piece. They get some funding from the Federal Aviation Administration for a grant program that helps them improve airports. And they also get, you know, a fair... chunk of change from this particular fee. But because they are facing such huge infrastructure spending needs that, yes, they are very, very eager to see this increase go into effect, and they are lobbying heavily to make it happen.
The airlines, however, are lobbying just as heavily that it not be enacted. because they are the toll takers. They have to put these charges on the ticket.
What revenue sources do airports already have to fund improvements?
Therefore, it makes their fares look like they're going up.
That's right. And they're going to be seen as the bad guy, even though they're not the ones technically collecting this fee.
Right. Airlines already collect a plethora of fees on behalf of the federal government. This is just one of many. This one goes straight to the airports. Many of the other fees go to pay for TSA and security or help their budget. Other fees go to customs. Other fees go to, you know, there's a lot of fees. I guess the most pernicious fee that airlines have to collect is the 7.5% federal excise tax on tickets. So... If you have a domestic ticket and it costs $300, you're going to pay $17 in federal excise taxes.
Definitely a lot of taxes and fees that pile up on tickets.
How could changes to bond tax status and the tax bill affect airport funding?
We're speaking with The Wall Street Journal's Susan Carey about possible fees from airports being added to airline tickets, and you're listening to your Money Matters from The Wall Street Journal. Welcome back, everybody. So, Susan, the airlines are against this fee proposed by the airports, as you just pointed out. And needless to say, passenger groups and passengers themselves are not very thrilled by this idea either.
I don't think the average passenger knows exactly how many fees and taxes that they pay on their ticket. But when you go and book a flight online at the airline's website or at Expedia, you find a fare that you like and you think, oh, this is a smoking deal.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:02–0:20
2
Why are airports pushing to add new fees to airline tickets?
0:20–1:11
3
How much could the proposed airport passenger fee increase ticket costs?
1:11–2:14
4
How would the fee be applied across multiple flight segments?
2:14–3:27
5
What revenue sources do airports already have to fund improvements?
3:27–4:25
6
How could changes to bond tax status and the tax bill affect airport funding?
4:25–6:14
7
Why are airlines and passenger groups opposing the proposed fee?
6:14–7:46
8
What should travelers know about the total taxes and fees on airline tickets?
7:46–8:07
Speakers
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