Advertised air fares a taxing question

By JIM EAGLES


The debate over whether airlines should include all taxes and surcharges in their advertised fares raises some interesting issues.

On the one hand, an advertisement offering a single fare between Auckland and Sydney at $129 is a little dishonest when the actual cost of a return trip, by the time the unavoidable extras have been added in, will be around $450.

The Commerce Commission won this battle with regard to domestic airfares a few years ago but international airfares continue to be advertised in a manner which fails to give the full picture.

That's not fair to consumers.

On the other hand, the issue is a little more complex than appears at first glance.

With some international flights the level of extra charges to be paid depends on variables like the route taken, the currency used and whether there are stopovers.

Not only is it impossible to quote a set price for a flight from, say, Auckland to London, it can also deprive consumers of important information. As Flight Centre managing director Graeme Moore points out, "A return flight to London via Los Angeles can incur up to $75 more in charges than one via Singapore. Consumers need to be aware of where these costs lie so they can make a more informed choice."

There is tough competition in the travel business and consumers often follow the lowest prices regardless of the small print. Go Holidays, which has responded to the debate by highlighting all-inclusive fares, is being quite brave in taking such a lead.

Finally, airlines like Air New Zealand have been working hard to get fares down and boost passenger numbers, so it's hardly surprising they are reluctant to see the tax collectors and monopoly airport companies undermine all their hard work.

Personally, I'm all in favour of taxes being kept separate so passengers can see just how much they are being fleeced.

Given the choice of paying $100 for landing at Sydney or $20 at Nadi some people might feel bolshie enough about the Aussie rip-off to opt for Fiji instead.

And there is good reason to keep the spotlight on our own departure tax given that, as I pointed out in an earlier column (Travel, July 6), the Government has a working party which is likely to recommend increasing the burden on air travellers by $30 million a year.

So what's a solution that's fair to both consumers and airlines, and keeps the brakes on the tax gatherers?

First, the advertised ticket price should certainly include additional costs, like fuel surcharges, which have been imposed by the airlines themselves.

Second, where the total tax burden is quite clear - on Auckland-Nadi flights, for instance - the complete price should be stated reasonably prominently.

Third, where the total tax burden is not clear - as with Auckland-London - there should be an indication of what the full price starts at.

Fourth, and most import of all, the Commerce Commission should take the initiative in drawing up rules - maybe by calling a conference of airlines and travel companies - then strictly policing them.

As House of Travel boss Chris Paulsen puts it, "If across the industry there was a commitment to include the taxes there would be a level playing field and the consumer would be able to compare apples with apples."

I quite like the idea of advertisements saying: "Return air tickets to Sydney from only $258 but government and airport charges will increase the cost of your trip to $450."

If air travellers read that and start getting grumpy, governments might stop regarding us as a cash cow to be quietly milked.

After all, New Zealanders going overseas will have paid their share of taxes before accumulating the trip price. And overseas visitors already pay about $1 billion a year in gst. How much more does Michael Cullen want?