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The real sticker-price of air travel

By Jonathan J. Ariel - posted Thursday, 24 January 2008

As the fishes swim, the distance between Point Piper and Kirribilli House is very short indeed. But for the next Liberal Prime Minister, Malcolm Turnbull, that passage will be long and very, very gruelling.

The party’s legitimacy was gutted on November 24, and while there is no single step that he can now take to wipe the slate clean overnight, there is one thing that he can do to improve his party’s chances come the next election.

To translate the public’s (great) affection for Malcolm into votes at the ballot box - be it in 2010 (against Prime Minister Kevin Rudd), or much earlier, against the perishable Liberal Leader (Mr Brendon Nelson) - the Shadow Treasurer must ape Kevin07’s pre-election strategy. He must set the agenda for his opposite number, Treasurer Wayne M. Swan, much like (then) opposition Leader Kevin M. Rudd set the agenda for (then) Prime Minister John W. Howard.


A good way to jump start is to focus on consumer rights. The travel industry, for instance, is well overdue for reform given the shenanigans perpetrated by airlines and travel agents under the Big Top called taxes and surcharges.

Taxes and surcharges to the travel industry are what freak shows are to circuses. Who knows what you’ll find once you agree to pay the price of admission? And just like a freak show, you have no control over any aspect of the taxes and surcharges. You can’t minimise them, avoid them or even question the legitimacy of being levied certain charges let alone the quantum of those charges. Simply put: if you don’t take the travel agent’s invoice as gospel, you don’t fly.

Let's look at two major components of taxes and surcharges: fuel surcharges and agent’s ticketing fee.

On January 8, when nobody was looking, the Spirit of Collusion (formerly known as the Sprit of Australia) boosted international fuel surcharges by a whopping 17 per cent. This will see the public fork over (to Qantas) an extra $130 million this year. Good work if you can get it, isn’t it?

Mr Gordon Renouf, Director of Policy and Campaigns at Choice, claims that such pricing practices confuse the flying public and that the airline should raise ticket prices when its costs rise, rather than impose murky “surcharges”. He’s not wrong. Are you listening Mr Turnbull?

Mr Peter Costello, the previous Federal Treasurer, for some reason, never promoted greater transparency in airline fare advertising. The current Shadow Treasurer has a golden opportunity to enhance his credibility by steering the Federal Government towards consumer protection legislation that will compel full price advertising of services in all retail operations, including travel related services, motor vehicle sales, mail orders and so on.


What’s the issue? Airline advertising practices in the Australian travel industry do not currently provide accurate and complete fare information for consumers to base their travel purchasing decisions.

Why is it an issue? There is a growing sense of "sticker shock" in the airline travel industry. Consumers are generally not aware of the level of surcharges imposed above the advertised price of airline travel services. These are aggregated once payment is about to be made. The undisclosed amounts of taxes and surcharges include airport charges; passenger movement fees; airport improvement levies, fuel surcharges, government charges, insurance and air security premiums. And, as I discovered this week, Flight Centre also throws in a $28 “ticketing fee” under the guise of “taxes”. That’s right. They add a fee for themselves in the “tax” column and in so doing deceive customers. How sweet is that? They can “match” other agents’ ticket prices by excluding part of their commission from the sticker price, only to fleece the hapless customer at a later stage.

And it gets worse.

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About the Author

Jonathan J. Ariel is an economist and financial analyst. He holds a MBA from the Australian Graduate School of Management. He can be contacted at

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