Taxes on Air Fares Are Jetting Into Higher Orbit

New taxes and other charges affecting the travel industry are going to have different measures of budgetary impact on travelers. The bottom line of this trend is simply that it may get more expensive to leave, stay at and depart from destinations.

While the individual amounts may be small, they can certainly put a dent into a multi-country itinerary. It’s quite likely that travelers will be paying more attention to taxes and surcharges in the future, though this is a practice they should already be following.

Airlines are already collecting a new $5 customs fee on all international tickets for destinations in the United States except from Canada, Mexico, Caribbean and U.S. territories. Opponents of the controversial measure had argued that U.S. travelers could start facing similar fees, created in retaliation against other countries.

Burgeoning Fees

Imagine a scenario in which you’re going to three or four countries on a trip and the fees can really add up. Many nations already have departure fees, plus value-added taxes (VAT) that can include hotel rooms, restaurants and car rentals as well as other purchases.

Meanwhile, the Reagan Administration may try to extract more revenue from the customs user fee by expanding it to all countries. The amount of the tax, however, might be decreased to $2.50 per person.

Individual states can also play a significant role, directly and indirectly.

A visit to Hawaii, for example, is going to be a little more expensive next year as the state has just approved a 5% hotel room tax in addition to the current 4% state excise tax levied on hotel guests. The new tax, to begin Jan. 1, 1987, covers hotel and condominium rooms occupied for less than 180 consecutive days.

Visitors to New York are also going to be shelling out another 5% in hotel room taxes.

Florida Fuel Tax

In a state-imposed tax that could have far-reaching implications, Florida has been upheld by the Supreme Court in its fuel tax on foreign airlines. The Supreme Court decided that the Federal Aviation Act permitted states to levy taxes on fuel and supplies, though the federal government has control over most elements of airline/aviation operations.

One of the basic arguments against the Florida tax was that it could endanger bilateral agreements between the United States and other nations that exempt airlines from certain taxes and provide for reciprocal tax immunity.

Again, imposition of such taxes can obviously lead to the carriers’ added costs being passed on to travelers, one way or another.

There is a $2.50 airport tax at Boston and Las Vegas has been considering a similar $7.50 airport levy.

Paying for Security

The cost of traveling to Europe by air has also been augmented by surcharges levied by some airlines to cover new security precautions. With the threat of terrorism generally considered to be a potential menace that will be a problem for some time to come, it’s likely that more security-related efforts, involving both new technology and personnel, will be utilized by all segments of the travel industry--airlines, airports, cruise lines, hotels, etc.

The costs of providing this security will also ultimately be borne by travelers. Paying for this additional protection is well worth it, but it does mean another crimp in the budget.

With many of these charges, it’s up to the travel agents to explain what they are and where they may be reflected in your tickets.

“We advise clients verbally about some of these taxes and charges,” said Martha Wood, manager of Glendale Travel in Glendale. “We tell them what the base price is, for example, on a round-trip flight to Europe and that there is a $3 U.S. departure tax, a $5 custom tax and possibly a $5 surcharge for the extra security measures taken by the airlines.”

Decoding Tickets

In addition, travelers are told where to spot these charges on their actual tickets. “The amounts are on the tickets, but with codes the consumer doesn’t necessarily know,” Wood said.

Clients are also advised about service charges agents may apply to customized itineraries and perhaps for such matters as rewriting/reissuing tickets. Rising cancellation fees (as much as 50% on some discount tickets) on promotional air fares are another subject agents frequently explain.

“Consumers should ask travel agents about all taxes and charges,” Wood advised. “Get the precise breakdown. Many travelers, particularly when they’re getting a low-ball price such as with a charter or a ticket through a travel consolidator, are not interested in pinning down such costs. Once they see that the price is less than the regularly scheduled rate for that flight, they don’t go any further.”

Departure Levies

Another area where agents can provide useful information is in the airport departure taxes you’ll have to pay at some foreign destinations, and whether this amount can be paid in U.S. currency. At some countries you can only pay such last-minute assessments in the local currency, which means possibly exchanging travelers checks unless you’ve planned ahead and put aside the right amount.

“I don’t think there’s an airport in the world that doesn’t have a tax,” said Heinz Neiderhoff, president of DER Travel. “And some of them are quite high.”

Neiderhoff pointed out that in most cases, these charges are included in the basic fare with scheduled air lines. However, these taxes may be listed separately as part of the total price by some charter operators to reduce the amount of commission they pay travel agents. “The higher the tax, the more likely it is to be quoted separately,” Neiderhoff said.