Fare trade: where your money goes

Published Feb 23, 2009

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If you've ever been excited when quoted the price of a "cheap" ticket before being told it excludes airport taxes, you have probably also questioned why the latter is sometimes almost half the price of the ticket.

British Airways and South African Airways broke down the cost of several economy class real ticket bookings to illustrate who gets what slice of the price you pay for a single return ticket from Durban to Johannesburg to London.

A BA ticket booked on February 12 to fly to London on March 1 and return to Durban on March 25 would set one back R26 726.

British Airways spokesperson Stephen Forbes said the price of the fuel surcharge and airport taxes was sensitive to the price of fuel and the rand/dollar and pound exchange rates.

UK airport taxes are charged in sterling and the fuel surcharge in dollars.

He said airlines separated fuel surcharges from the fare into the "tax" portion so that it could be adjusted with fluctuating fuel and currency prices.

"It is adjusted as the fuel price increases or decreases. British Airways' fuel surcharge differs according to the length of the flight and the cabin in which customers travel.

"The fuel surcharge was reduced on December 18, 2008 following a fall in the price of oil.

For flights of over nine hours it was reduced by $45 in Traveller to $141, in World Traveller Plus it was reduced by $45 to $177 and in Club World it was reduced by $52 to $205 and in First it was reduced by $52 to $205," Forbes said.

SAA spokesperson Robyn Chalmers said the fluctuating oil price in mid-2008, when it was at its highest, had a significant effect on SAA as energy was the main contributor to operating costs.

"In 2007/08 the high fuel price added R951 million in unbudgeted costs and made up 30 percent of operating costs. SAA reviews its fuel levy on a monthly basis in view of changes in the oil price and exchange rate.

"However, the airline has never been able to fully recover fuel costs, notably when the price of crude was at more than $140 towards the middle of 2008, as this would have made ticket prices unaffordable.

"Compounding this, there is a lag of between three to four months from when the price of crude oil lowers to when the airline can benefit from this.

"A further complicating factor is that SAA pays in rands for crude oil and the rand has devalued against the dollar.

"SAA has already begun adapting its fuel levy in 2009 with decreases on a number of its international routes and will continue doing so if possible," Chalmers said.

The Airports Company of South Africa has announced an 18 percent increase in airport taxes effective from May 1.

Acsa spokesperson Solomon Makgale said the company believed the increase would not lead to a drop in passenger numbers as suggested by some airlines as the new passenger surcharge for international flights was increasing from R112 (including Vat) to R135.

"Acsa is run on commercial terms to ensure efficient and transparent management of shareholder investments.

"Infrastructure investment is outlaid to provide a service which should be remunerated by the users of such infrastructure (passengers and airlines).

"The amount on airline tickets quoted as 'airport taxes' is not fully attributable to Acsa services, but a major component thereof relates to an airline with a significant portion thereof relating to fuel levies and government charges.

"Only a fraction of the 'airport taxes', known as Passenger Service Charge, accrues to Acsa.

"The current level of tariffs is marginal in relation to the total cost of travel and does not reflect the full cost of the service and infrastructure provided by Acsa.

"We believe that there is an opportunity to increase Acsa tariffs in line with the service required and that our passengers would appreciate the value added," Makgale said.

Meanwhile, the UK government has proposed to increase airline passenger duty from November and again in November 2010.

The new "green" rates are based on distance bands of 3 200km, measured from London to the capital city of the destination country.

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