Up, up and away with airline fees

Is the advertised air fare too good to be true? Airline fees and surcharges can
add hundreds of dollars to the promised price. Call it misleading advertising,
but the practice won’t change anytime soon. Efforts to enforce “all-in”
ticket prices have reached another stumbling block in parliament, according to
recent news. The problem: airlines claim all-in advertising hurts their ability
to remain competitive with foreign carriers, so the government is still consulting
with industry stakeholders. In addition, the provinces can’t seem come to
a consensus on how to regulate travel agency advertising.

For now, the only way to prevent “sticker shock” is to do a little
math yourself to calculate in the extra fees. If you plan to fly in the near
future, here’s what you can expect to add to your fare.

Standard Fees

These standard fees will appear on every ticket, and there’s no way
to avoid them:

NAV Canada Surcharge: Think of this fee as infrastructure
support. In Canada, this surcharge covers the fees that the airline pays to
NAV Canada to run the air navigation systems. Transborder flights typically
run $7.50 each way, while flights within Canada range from $9 – $20.

Insurance Surcharge: As insurance costs go up, airlines pass
these costs along to their customers. This surcharge is still one of the smaller
ones. For example, Air Canada charges $3.00 each way.

Airline Travellers Security Charge (ATSC): The additional
fee we pay for the extra security personnel and equipment added since September
11, 2001. Within Canada, the charge ranges from $5 – $10, while international
flights carry charges of $8 – $16.

Airport Improvement Fees (AIFs): These fees typically range
from $5 to $20, but can go as high as $40 – $45 in some parts of Canada. Sometimes
these fees are added to your ticket, but sometimes they are collected at the
airport when you depart. Look for the AIF charge on your ticket to see if you’re

If you’re flying from Canada into the United States, you can expect to
add the U.S. Transport Tax, U.S. Agriculture Fee, U.S. Passenger Facility Charge
and the U.S. Immigration User Fee. Other countries implement their own fees
and taxes, often at the point of entry or departure.

Fuel surcharges

Rather than raising the cost of fares to compensate for increased fuel costs,
airlines add a “fuel surcharge” instead. While the concept of surcharges
certainly isn’t new, what is different is that more and more companies
are choosing to implement them. In May, Air Canada and WestJet followed suit
with many of their international counterparts and added fuel surcharges to their
fares. Look for an extra charge of $20 – $45 per flight depending on how far
you fly. Planning to cross the Canada/U.S. border? The charge is $50. Surcharges
on international flights can soar into three digits with some as high as $450
to fly from the U.S. to London, according to FareCompare.com.

The amount of existing surcharges is also on the rise across the globe. Virgin
Atlantic, U.S. Airlines, Lufthansa, British Airways, AirFrance and Air Berlin
are just a few of the carriers that hiked their surcharges this spring. The
dates when new charges start are usually announced in the media, so it doesn’t
hurt to pay attention and book ahead.

Luggage fees

The hot topic this year is luggage. First it was the $25 charge for the second
checked bag. Then the surcharge for overweight or oversized bags crept up by
an additional $25 – $50, as did special item handling costs for things like
bicycles or kennels. The cost of travelling with pets also increased as well.
Then United Airlines added a $15 fee for the first checked bag — a move
quickly matched by American Airlines and US Airways (and other airlines may
follow suit).

Can you avoid these fees? Some airlines don’t have them yet. Otherwise,
if you’re not a member of a loyalty program or class that is exempt, your
only option is to pack light. Stay within the size and weight restrictions for
checked baggage. (Remember, if you exceed both restrictions you’ll have
to pay both fees for an extra $200 – $300 each way). Be extra careful if you
go for carry-on only. Chances are other travellers are planning the same tactic,
and room in the passenger compartment is limited. You may be asked to check
your bag at the gate, and you’ll only dodge the fee if your bag fits within
the size and weight restrictions for carry-on luggage.

Booking and tickets

How much would you pay to talk to a real person or to book online through
a third-party reseller? Take a look at the numbers:

– Many airlines charge from $15 – $25 per person to book a ticket over the
phone if the arrangements could have been made online instead. Those numbers
could be on the rise as well. U.S. Airways plans to increase the service fees
for booking over the phone or in person by $20 – $45 dollars. Travel agencies
and online travel websites may also charge a fee.

– Many reseller websites charge a booking fee even if you book online. For
example, Travelocity charges $6 – $12 for each airline transaction.

– If you want a seat assignment when you book expect to pay between $5 and
$100 depending on the airline and destination. Other than choice seats and extra
legroom, a seat assignment can help prevent being bumped from an over-booked

– You can save money by sticking to your original plans. Refund or exchange
fees vary by airline but can run as high as $150 – $200.

The good news is there is usually no cost for booking a flight directly through
an airline’s website. Opt for an e-ticket and you can save yourself the
shipping and handling fees for paper tickets.

What’s next?

Watch the industry news and you’ll see a general pattern: one or two
major airlines start charging for something and many others will follow suit.
If you’re looking ahead at the potential trends, snacks and drinks will
be next to go. Some carriers now charge for snacks and beverages that used to
be complimentary. U.S. Airways even plans to charge for bottled water, which
passengers can’t bring through security under restrictions on liquids
and gels. Curb-side check-in now comes with a charge as well.

And your reward miles may also cost you money in the future… As of August
6, 2008, U.S. Airways will be charging a new “award redemption processing
fee” ranging from $35 – $50. No word yet on whether other companies will
employ the same strategy.

The Bottom Line

We tested the costs with a round trip flight from Toronto to New York booked
online through Air Canada (booked online June 18, 2008 for travel in July).
The $198 round trip Tango Plus fare ballooned to $409.19 when taxes, fees and
surcharges were added in. Lounge access would have added an extra $60, and the
“On My Way” service option would cost another $50. We didn’t
take advantage of the small discounts for not checking luggage or not accumulating
Aeroplan miles, and we kept the ability to exchange or refund our ticket (for
a fee, of course). “Advance seat selection” was complimentary with
this fare.

Travelling within Canada wasn’t much of a bargain either. A flight from
Toronto to Vancouver on the cheapest fare ($498) had an additional $214.25 in
fees, taxes and surcharges. Advance seat selection would have added $20 each
way, and we saved $50 by booking online.

In short, it’s easy to see how fees pile up. Before you jump at a low
advertised price, check out these sources for more information:

– For U.S. carriers, try Rick Seaney’s Domestic
Airline Fee Chart
on Farecompare.com.

– Check your airline’s website for additional charges and information.

– Read the policy and booking fees section of online travel websites, and pay
attention to the “fine print”. Charges could be levied based on
a per trip, per person or per ticket basis (for journeys with multiple legs).

– Ask about booking fees before you book over the phone or with a travel agent.

Conditions and costs vary by airline and can change with little notice. There’s
always the possibility that some companies won’t adopt new charges or
charge less for services as a way to stay competitive. Southwest Airlines “Fees
don’t fly with us”
campaign is a poignant example of how fees
(or lack thereof) can be used to gain advantage over competitors.

Make room in your budget — Fees and surcharges are not likely to decrease
anytime soon.


AirCanada – What
are the additional charges in my Fare?


Globe and Mail — Tories
wrestle with airfare ads

Airways Accelerates Business Model Transformation
(press release)

— Travel Information

Photo ©iStockphoto.com/Mark Evans


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