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Airline tickets are packed with lots of sneaky fees.
EVER get the feeling you are being ripped off? The number of surcharges, levies and taxes on an airline ticket is already out of hand. But this week the government increased the tax on flying out of Australia by nearly 10 per cent.
The Passenger Movement Charge went from $55 to $60. That sneaky little tax hike hits both Aussies who go overseas, and foreign tourists who want to visit our wide brown land.
The charge was originally supposed to pay for things like customs, quarantine and immigration. But as this graph shows, the government is collecting a mountain of money from the charge — more than border management costs.
Source: Tourism and Transport Forum AustraliaSource:Supplied
The government has hiked the Passenger Movement Charge even higher because they assume we won’t notice. (Remember — at the same time as doing this it is arguing for company tax cuts. Corporations definitely do notice a tax hike!)
Maybe they are right. Do we even pay attention to all those charges? I took a Virgin flight to New Zealand recently and there was a little list at the bottom of the email.
â— $55 Passenger Movement Charge
â— $4.22 International Safety and Security Charge
â— $39 Passenger Service Charge
â— $12.40 Passenger Security Charge
â— $29.20 Passenger Service Charge
â— And also a booking fee of $10, just to add insult to the injury.
Bonus points if you notice I got charged twice for passenger service, and also twice for security.
What even are all these charges? Some are doubtless official taxes, some are airport fees, and others might be suspicious add-ons like the old “fuel leviesâ€.
Jetstar said it included a number of fares and taxes in its ticket price on behalf of governments.
“All airlines also include airport fees in the fare which are based on commercial arrangements between airlines and airports,†the spokesperson said.
I contacted Virgin Australia but it did not reply in time for publication.
STRAP IN AND ENJOY THE RIDE
Passengers are trapped. There are not so many airlines, and even fewer airports, and they are all operating in a market that is characterised by very confusing pricing structures.
We do what we can to control the main players. The courts are chasing the airlines on their drip pricing policies, while the ACCC is policing the airports on parking fees. But there are limits.
What it means is they generally don’t absorb fees like some business would — they pass them on to consumers. That is bad news not just for anyone heading overseas for a holiday, but for the whole Australian economy.
Tourism can be Australia’s next economic saviour — it counts as an export. But if the government treats the tourism industry like a piggy bank, we’re not going to get the benefits of it.
As this next chart shows, tourism is our biggest service export and growing rapidly.
Source: Productivity CommissionSource:Supplied
It might not be as big as iron ore exports, but growing tourism is probably better for the real economy, because it channels money into the parts of Australia where people actually live, and the kind of businesses that actually employ people. (Iron ore mining is increasingly done with autonomous trains and trucks now. Which is great for robotics engineers in Perth, but not so useful for everyone else.)
Tourism is not fashionable like hi-tech industries, but it can be a hugely helpful part of Australia’s export economy. We need to make sure we give it the kind of respect and support we give to other industries.