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Airline Tickets Explained, what are the elements of cost on my Airfare

02/06/17

Permalink 05:39:59 pm, by Melba
Categories: Commentary, Travel

Airline Tickets Explained, what are the elements of cost on my Airfare

There are several avenues to get an airline ticket today. You can go online to the airlines website or a third-party travel site. You can call a travel agency or a tour operator. Or you could go into an airline ticket office. Irrespective of how or where you purchase your ticket there are several variables that determine the amount that you pay.

Most agencies and some airlines charge a service fee for ticket purchase. These fees vary and are independent of the price of the actual ticket. Apart from these fees the actual cost of an airline ticket comprise of three main components.

1.       Government taxes, fees and charges

2.       The Carrier's base fare,

3.       Carrier imposed service fees which are optional

Government Taxes, Fees and Charges (TFC)

Airlines collect various taxes, fees and charges (TFC) on behalf of government agencies and/or airport authorities.  Government taxes are imposed for raising revenue for the country's general treasury used for general public services. Examples of some government imposed taxes are Arrival or Departure Taxes, Value Added Tax, Transportation Tax and Passenger Tax to name a few. Charges are imposed for raising revenue for specific aviation related facilities or services. Examples of some airport charges are, Passenger Facility Charge, Safety and Security Charge and International Aeronautical Development Charge. The word Fees can be used instead of either taxes or charges depending on what the revenue is used for.

The Government TFCs applicable for each country visited on a passenger’s journey are in addition to the carrier’s fares and charges and are payable by the passenger.  They are identified by two letter codes entered in the “TAX/FEE/CHARGE’ boxes of the ticket along with the TFC amounts.  Irrespective of which airline is used for travel the TFC on each route are the same on each airline.

Example Route: Miami via London to Paris

Government, authority and airport charges-Per adult

·         Transportation Tax(Departure) – USA: USD 17.80

·         Passenger Civil Aviation Security Service Fee – USA: USD5.60

·         Air Passenger Duty - United Kingdom: USD18.75

·         Passenger Service Charge - United Kingdom: USD42.99

·         Passenger Facility Charge: USD 4.50

Total government, authority and airport charges*: USD 89.64

There are instances where some passengers are exempted from some government TFC. Exemptions vary from one country to the next and are usually based on specific requirements.  Some of the more popular exemptions are Infants not occupying a seat, passengers travelling on a diplomatic passport, some transit passengers not being inspected by immigration, some domestic travel and some military passengers to name a few. Some governments will exempt national sport teams and government workers from certain TFC; however special authorization is required prior to travel in order to qualify.

The Carrier's Base Fares

There are different fare structures used by different airlines worldwide. There was a time when airfares were mostly calculated on a mileage basis. In a nutshell, this involved fares based on a maximum permitted mileage from the point of origin to the passenger's final destination which allowed passengers to make stops along the way if desired at no extra cost. Simplified, for a passenger originating in New York going to Rome wishing to stop in Paris on the way, the fare used would be a New York to Rome fare which allows the passenger say 4500 miles. Providing the miles from New York to Paris, plus from Paris to Rome did not exceed 4500 miles, then that would be the fare charges for the full journey.  This fare structure involved many checks and balances to ensure that passengers did not undercut the fares on any portion of that journey. This type of fare structure also allowed for more than one carrier to share in one passenger’s journey. Where multiple carriers were used, the total amount paid would then be prorated (shared) based on the mileage covered by each carrier.

Today the trend in the travel industry is to offer one-way fares making all the fare rules similar within the same area. So for the same journey from New York via Paris to Rome, the passenger would be charged a one way fare from New York to Paris plus a one way from Paris to Rome.

A one-way fare structure makes fare calculations, reissues, and revenue accounting easier for all to manage. On trips with multiple sectors fares are combined end on end to form a complete journey. Each carrier gets the total fare for each sector covered.

On each route, carriers will have several fare levels with an average sell up of USD10.00 or 20.00 at the lower end with a gradual increase to USD30.00 or more in some cases at the higher end. Some carriers carry advance purchase time limits on the lower level. The intent is to increase the base load on the aircraft in advance and sell up there after. The number of seats sold at each level is determined and controlled to get the best revenue mix.

Example Fares between Miami and New York

Fare Basis

Fare Amount

A

99.00

B

109.00

C

129.00

D

159.00

E

189.00

An integral part of air fares are the fare rules that govern them. A fare rule is the necessary provisions and conditions under which travel may occur to meet the special requirements of the carrier or the governmental regulatory agency. Some basic components of a fare rule include, but are not limited to;

·         Eligibility

·         Advance Purchase

·         Day of the week application

·         Penalties

·         Minimum/Maximum stay

·         Applicable discounts – Children/Seniors/Students etc

Application of Fares

·         Once a reservation is made and a ticket is purchased, the fare is guaranteed for transportation subject to the fares, fare rules and charges in effect when the ticket is purchased. If an increase in the fare becomes effective, the ticket shall be honoured for transportation between the airports at the fare for which it was purchased.

·         Changes to any portion of a Ticket initiated by the Passenger after its original issue will be subject to the fares, fare rules, and charges in effect on the date the change is initiated. A change constitutes a change in flight number, origin, destination, intermediate points, flight date, class of service, or fare.

·         Most fares today are non-refundable. On such tickets if you cancel your trip, you will not get your money back however some carriers will allow you to apply your ticket to another trip in the future, at a change penalty and providing that you cancel your original booking before the flight departure time.  Many airfares also carry a penalty for changing flights or dates providing space is available in the original fare type. If the fare-type is not available on the new booking you may also have to pay any difference in air fares.

Carrier imposed Service Fees (optional)

The third possible element to the cost of your airfare is any carrier imposed Service Fees/Charges. Some of these fees are not as obvious as they are included in the base fare amounts. They are usually written as a surcharge in the fare calculation box of the ticket while other Service Charges appear in the tax boxes along with the Government taxes. These surcharges can be labelled as a Fuel Surcharge, an Insurance Surcharge, a Security Surcharge or a Miscellaneous Surcharge to name a few. On any particular route, different carriers may have different levels of surcharges or none at all. These can be very high especially on transatlantic and transpacific journeys and is an important element for you to check when doing fare comparisons.

Along with the carrier imposed fees which passengers must pay once airlines impose them, are other service fees which are optional. A growing concept in the travel industry is the concept of unbundled fares. This involves carriers itemizing and selling each service individually. Services that can be added at the time of ticket purchase are baggage fees, early bird check in, movies, seat selection and travel insurance to name a few. Airlines try to encourage prepayment by making these services cheaper when purchased online before arrival at the airport.

 

The cost of an airline ticket varies from airline to airline not because of the Government TFC but because of the carrier’s base fares and carrier imposed fees. Also, very important is the level of fare available at the time of ticket purchase. Understanding the elements of cost of your ticket gives you a better opportunity to make the best deal when next you travel.

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