US: Advertised fares now include fees and taxes

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Mal

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Travel | Fare deal: Airline prices now include taxes, fees | Seattle Times Newspaper

No longer acceptable is listing prices, not including taxes and fees, in big, bold type, followed by the bottom-line price in small print.

"Under the new rules, they will have to incorporate taxes and fees into the fare that's stated — the first fare that the customer sees," U.S. Department of Transportation spokesman Bill Mosley said in an interview a few weeks ago.

Now, how about extending this to takeaway and other stores in the US :D
 
The practice of + or ++ prics around most of the world really annoys me.

It's very frustrating to never quite know what you're going to pay at the register or when you get the bill.
 
I guess AA were hoping it would not come to pass.

Their home page now has the following banner:

[table="class: grid, align: center"]
[tr]
[td]Due to technical problems, the initial prices shown on AA.com do not include all taxes and fees. Taxes and fees will be added prior to payment.[/td]
[/tr]
[/table]
 
Some people in the US are really against this.

They reckon it's going to hurt sales because:
  • It will make advertised prices much higher, creating a perception that everything's more expensive and hence less people will buy.
  • It doesn't distinguish enough that there is a charge set by the airlines and some which just go to governments etc., i.e. it's not fair that an advertised price should be fully villified upon the airline when the airline isn't pocketing the entire amount.
  • As a "corollary" of the above point, if the government decides to raise the prices of taxes applicable to airfares (or whatever authority), they can do so. The corresponding increase in prices as reflected by the total advertised by the airline will not make it immediately clear that the increase was not something completely advocated by the airline. This is the big point the airlines are pushing - they claim they are forced to uphold a facade which introduces a slippery slope for taxes to be increased at the reputational expense of the airline.
  • It's not full disclosure anyway, since passengers necessarily may purchase bags, food etc. which aren't chargable until after the customer makes a decision upon the printed fare.

I personally support this new initiative and have a very hard time understanding why any of the above arguments are actually valid.
 
Some people in the US are really against this.

They reckon it's going to hurt sales because:
  • It will make advertised prices much higher, creating a perception that everything's more expensive and hence less people will buy.
  • It doesn't distinguish enough that there is a charge set by the airlines and some which just go to governments etc., i.e. it's not fair that an advertised price should be fully villified upon the airline when the airline isn't pocketing the entire amount.
  • As a "corollary" of the above point, if the government decides to raise the prices of taxes applicable to airfares (or whatever authority), they can do so. The corresponding increase in prices as reflected by the total advertised by the airline will not make it immediately clear that the increase was not something completely advocated by the airline. This is the big point the airlines are pushing - they claim they are forced to uphold a facade which introduces a slippery slope for taxes to be increased at the reputational expense of the airline.
  • It's not full disclosure anyway, since passengers necessarily may purchase bags, food etc. which aren't chargable until after the customer makes a decision upon the printed fare.
I personally support this new initiative and have a very hard time understanding why any of the above arguments are actually valid.

Whilst I agree, these arguments are hardly valid, I remember sitting in a bar in SFO talking to a friend of mine who is a local, and she couldn't believe it when I told her that if something says it'll cost $10 back home in Australia, that is all you will pay (the idea of including all charges including tax was very foreign to her). Some Americans are just so used to adding on taxes \ tips \ extra charges that they don't ever realise that they've just spent $130 for something they thought was going to cost them $100.
 
I guess AA were hoping it would not come to pass.

Their home page now has the following banner:

[TABLE="class: grid, align: center"]
[TR]
[TD]Due to technical problems, the initial prices shown on AA.com do not include all taxes and fees. Taxes and fees will be added prior to payment.[/TD]
[/TR]
[/TABLE]
AA's website has now come to the party.
 
  • It will make advertised prices much higher, creating a perception that everything's more expensive and hence less people will buy.
Let me rephrase that, under previous scenario the airlines were advertising a price that made their customers perceive it was cheaper than it really was. I'm sure the U.S. Department of Transportation would say this is exactly why the advertised price should include unavoidable fees and charges.
  • It's not full disclosure anyway, since passengers necessarily may purchase bags, food etc. which aren't chargable until after the customer makes a decision upon the printed fare.
The key word here is may, full disclosure in most industries applies only to charges they will be charged (i.e. are unavoidable) rather than things they may choose that they can also (easily) choose to avoid.
 
Most other businesses around the world survive using the one single price method (with a breakdown of different components if they deem it necessary), I'm sure when the US moves into the 21st century their's will as well...
 
Let me rephrase that, under previous scenario the airlines were advertising a price that made their customers perceive it was cheaper than it really was. I'm sure the U.S. Department of Transportation would say this is exactly why the advertised price should include unavoidable fees and charges.

The key word here is may, full disclosure in most industries applies only to charges they will be charged (i.e. are unavoidable) rather than things they may choose that they can also (easily) choose to avoid.

Just want to make it clear that I support the full inclusive pricing; my arguments given above was simply passing on what are the arguments against the change, which are mostly being spearheaded by the airlines.


The problem is that, as it is seemed to be perceived by the airlines (and perhaps other businesses, not necessarily travel related), customers make a good call on whether they will buy something or not based on the spot price. If the spot price looks cheap, a customer is more likely to be drawn in to have a closer look, compared to if it looks more expensive upon which a customer may decide to just walk on by.

Airlines would rather say a lower price with a huge rider saying "plus taxes, fees and surcharges; baggage and food additional" rather than a higher price with a nice simple phrase "all inclusive" (or to that effect). It also helps them in that a customer doesn't know the exact amount of taxes/fees/surcharges, and only a subset of them probably know how much the first bag will cost or how much it is to get a deli sandwich on board (and for those that do know, they are probably frequent flyers who escape the bag fee anyway). The uncertainty forces customers to at least go to the website and price up so that they can make a better decision. A customer presented with an all-inclusive price can make a decision without perusing the website and thus the airline loses a period of contact where it might have had a chance to secure a sale.

That's how I reckon the airline marketing / sales teams are looking at this latest reform as negative. They're trying to allay the blame off them, of course, by using the false guise of 'disclosure' (or lack thereof as they are accusing the regulators). I'd like to think (at least from a per se viewpoint) that airlines are not out to maliciously mislead people with respect to their fares. They just want people to visit their website and have a look at their fares (just as a bricks and mortar store wants to keep people inside the store as long as possible, as with that they are increasing the chances of landing a sale). All inclusive pricing would appear to hinder that objective.

This whole argument is pretty rubbish to most of us but that's because we're used to inclusive pricing for a long time (sans auxiliaries like baggage for non-elites, credit card fees, insurance etc.). There's some merit in asserting that a good deal of the US travelling public will be rather "dumb"; when these changes are put into force, the public will look at gazetted fares and automatically think that fares have gone up by a few dollars rather than thinking that the fare includes the taxes that they had to book through to add in before.
 
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Singapore has 'inclusive pricing' regulation; Hong Kong does not.

I am now in the habit of mentally adding +++ to ex Thailand fare emails but not for ex Singapore.
 
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