Effective January 26, 2012, the Department of Transportation will require airlines to disclose all mandatory taxes and fees in advertised fares. The reasoning behind this is that passengers will be able to see the total cost of a ticket at the beginning of an online hunt for the best fare, rather than after selecting the most convenient flight. I’m a big fan of transparency, especially when it comes to the goods and services that I purchase, and I think this new law has merit.
Of course, the low-fare ads are designed to grab attention and drive consumers to the site, but it would be nice to know how much tax and fees will be added to the fare so travelers can budget accordingly. Who hasn’t leapt onto an airline’s website after seeing “fares starting at $49 each way” only to realize your final cost will be well over $200? In the grand scheme of things, I still consider airfare that’s under $300 to be a good deal, but I like to have a ballpark figure of what I’ll actually spend up front. Planning a trip requires budgeting for me, and I prefer to know sooner, rather than later what my actual costs will be.
Now, I can understand such a law definitely impacts the airlines and how they market airfare deals. A few airlines have even lodged an appeal against this law, alleging a violation of commercial free speech. But, I’m not sure how to feel about this: on the one hand, greater transparency is great for the consumer, but on the other, no other industry is required to disclose mandatory taxes up-front. Think about when you last shopped online for merchandise…since I did all my Christmas shopping online, this memory is pretty recent. All taxes were added at the end of my shopping. If the airlines are supposedly guilty of a “bait and switch” by waiting to disclose mandatory taxes, aren’t all industries also guilty?
Unless I’m shopping at a duty-free shop, I always expect some sort of tax to be added onto my purchases. What would be nice is if the mandatory taxes were standardized either in dollar amounts or percent of purchase, then it’s a simple calculation. Another potentially helpful idea: an online fare calculator that includes tax. Or, develop a tool so consumers can enter the total amount (including taxes and fees) they want to spend and the airlines could return all search results that meet that criteria. Doing this early could help airlines make a positive impression to consumers in the wake of this new law and help to generate business.
Whatever happens, this new law is going to change how the consumers are exposed to fare deals, and the airline industry has the chance to embark on exciting new marketing strategies. In the meantime, if you need me, I’ll be looking for my next flight.