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Thursday, September 5, 2013

Pseudo-Naive Questions For A Political Economy of Airfares

I was in the process of making some travel arrangements (life is complicated, don't ask me). All that has brought me to some--to me, interesting--questions. Maybe it's just me, but I really don't understand some basic things here.

Here is the breakdown of a roundtrip itinerary between NYC and Europe, as reported by the online booking program I am using, a few minutes ago:

"Flight $250.00
Taxes & Fees $679.70"

I have a set of questions.

First: is this for real? A roundtrip flight, involving two legs both ways (e.g., EWR-ZRH, ZRH-BUD, or something like that, and return the same way), costs $250? If it is not real, why do airlines indicate these charges? How do they make ends meet? Has the airline business become a non-profit branch of the economy, and they are flying just to soothe their consciences, but otherwise at a financial loss?

Second: What is the deal with the "Taxes and Fees"? Aren't they supposed to give me a precise breakdown of what "Taxes" and what "Fees" I am paying, and to whom? Would any dinner guest accept a bill from a restaurant that says: "Meal: $15.00. Taxes and Tips: $79.95?" If customers wouldn't accept it from a restaurant, why do they accept it from a travel agency or an airline?

Third: I understand most airports are, at least in the US and Europe, private property nowadays. If so, they cannot possibly charge "Taxes," only "Fees." Fine. But why aren't they even giving me the cost breakdown among airport security (which is a set of private companies in Europe, while the TSA is part of the federal government in the US), baggage handling, etc.?

Fourth: One hears chatter, off and on, about "fuel surcharges." I suppose the idea is that such charges are not presented as part of the ticket price so that they can come down once there is a slump in hydrocarbon prices. But: do they ever come down? Since nobody tells me what part of my "Fees" are "fuel surcharges," I will never be able to tell whether the airline has actually dropped them or keeps charging "behind their customers' backs" so to speak.

Fifth: Is all this just basically a bookkeeping trick, so that airlines can claim they only make, say, $250 on a trip for which the traveller pays a total of $930? Put differently, how are those "Fees" reported to the tax authorities?

Finally, If I am paying "Taxes" on my air tickets, why can I not write them off from my income? It seems to me the "Taxes" I pay for my tickets constitute taxation of my already taxed (net) income. Unless of course if they are VAT-type of taxes. If that's what they are, which state am I paying the VAT to, in the case of, say, a flight originating from the US, making a stopover in Switzerland, and arriving in Hungary (and back)?

Just askin'.

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cover page of the book

cover page of the book
image used for the cover design by Anannya Dasgupta