internet Posted December 16, 2011 Share Posted December 16, 2011 Finally....http://www.cbc.ca/m/touch/news/story/2011/12/16/pol-airline-advertising.htmlAirlines will be forced to advertise prices with all fees and taxes included, according to a federal government announcement to be made Friday. Link to comment Share on other sites More sharing options...
Thebean Posted December 16, 2011 Share Posted December 16, 2011 Finally....http://www.cbc.ca/m/...dvertising.htmlAirlines will be forced to advertise prices with all fees and taxes included, according to a federal government announcement to be made Friday.This file is far more complicated than meets the eye and one could write a very long essay on the subject. Suffice it is to say that the devil is in the detail.The key is that everyone is forced to do it, (on both sides of the border), at, or close to the same time. I believe such a policy goes into place in the US in early 2012, though I'm not sure if it includes international flights from the US.The bottomline on advertising is that in almost all cases, he who advertises the lowest price gets the first call, (and the highest position on the CRS screens in the agencies). That first call more often than not translates into a sale.There will be a degree of confusion and poorly researched media stories where differing AIF's result in directional legs of the flights between city pairs are priced differently. There will inevitably be cries of "rip off" and someone will try to take the airlines to task on the issue. You can besure the mouse print on the bottom of advertising will not go away. It'll be exceedingly clear the price is directional only,I have little doubt airports will take the opportunity to conveniently raise their AIF's in order to "equalize" this issue.Fares will be rounded up to the nearest dollar, No one wants to advertise a fare of $123.62. $124 is better, and that 38 cents adds up over the course of a year.In otherwords, I doubt consumers will see fares drop as a result of this new policy.If I were a foreign airline not bound by this policy, I'd invest in a savvy web guy and figure out how to put my web advertising on every Cdn based ISP that made an inquiry to a Cdn airline website, with banners continuing to advertise "$49 to Manchester, or $99 to Montego Bay".That's the sort of thing that will drive the Cdn carriers nuts. Link to comment Share on other sites More sharing options...
Guest Posted December 16, 2011 Share Posted December 16, 2011 I don't see this as anything more than an attempt to reduce transparency in airline tickets and take attention away from the onerous taxes the government tacks on to those tickets.I wonder (not really as I know it's not going to happen) if the feds will take this approach to everything else. I recently looked at purchasing a new vehicle and the final price was a far cry from what was advertised. The difference was in the thousands. Link to comment Share on other sites More sharing options...
dagger Posted December 16, 2011 Share Posted December 16, 2011 If I were a foreign airline not bound by this policy, I'd invest in a savvy web guy and figure out how to put my web advertising on every Cdn based ISP that made an inquiry to a Cdn airline website, with banners continuing to advertise "$49 to Manchester, or $99 to Montego Bay".That's the sort of thing that will drive the Cdn carriers nuts. The US fined Air Canada for that in August, so I guess the Canadian government could do the same.I'm sure this opens up a whole new field of endeavour for CTA bureaucrats and tribunals. Link to comment Share on other sites More sharing options...
Guest Posted December 16, 2011 Share Posted December 16, 2011 I think rather it is a move to appease consumer groups who have made a lot of complaints about the misleading advertising where one is drawn to a fare with a very low price but after filling in the blanks for the reservation finds the final price to be several times higher.I think it's one of those situations where the gov't gets to protect their interest, and it just so happens that they can win public favor doing so.The same pricing principles apply to countless other industries, but the gov't doesn't seem to worried about those. Just the aviation industry, which they milk to death already. Link to comment Share on other sites More sharing options...
Guest ACSideStick Posted December 16, 2011 Share Posted December 16, 2011 The only reason the price advertised is NOT the actual price is completely the fault and greed of the Government (taxes, AIFs, security etc) not the airline. It is amusing that they have effectively "outted" themselves.I hope the airlines are able to incorporate IN BIG LETTERS the taxes and add-ons along with the final required total something like; Our lowest Montego Bay price of the year $224 for us, $150 for the government = $374 return. Make the gov't squirm a bit by using their own stupidity against themselves. When I go into a store and the chocolate bar says $1.00, they are blatently misrepresenting how much I need to pay. Don't even get started on car purchasing with delivery fees, taxes, enviroment hocus pocus which makes the $350 a month low advertised price $500. Link to comment Share on other sites More sharing options...
jkavafian Posted December 16, 2011 Share Posted December 16, 2011 The only reason the price advertised is NOT the actual price is completely the fault and greed of the Government (taxes, AIFs, security etc) not the airline. It is amusing that they have effectively "outted" themselves.I think that advertsiing Manchester flights at $59 and adding $550 in taxes and fees goes way beyond blaming government. Link to comment Share on other sites More sharing options...
jkavafian Posted December 16, 2011 Share Posted December 16, 2011 I think it's one of those situations where the gov't gets to protect their interest, and it just so happens that they can win public favor doing so.The same pricing principles apply to countless other industries, but the gov't doesn't seem to worried about those. Just the aviation industry, which they milk to death already.Only problem is I have never seem Primo advertise Pasta at 49 cents plus fees and surcharges of $2.49.I have not seen Acura advertise the MDX at $19,900 plus $30,000 in fees and taxes. Link to comment Share on other sites More sharing options...
dagger Posted December 16, 2011 Share Posted December 16, 2011 Only problem is I have never seem Primo advertise Pasta at 49 cents plus fees and surcharges of $2.49.I have not seen Acura advertise the MDX at $19,900 plus $30,000 in fees and taxes.I have certainly seen car companies advertise without the extra delivery, taxes, etc. I go into get an oil change and they add on various and sundry disposal/environmental charges. Link to comment Share on other sites More sharing options...
jkavafian Posted December 16, 2011 Share Posted December 16, 2011 I have certainly seen car companies advertise without the extra delivery, taxes, etc. I go into get an oil change and they add on various and sundry disposal/environmental charges.I know that and it's a valid point. The magnitude is not the same as what airlines are doing. Did you see the $29 fare to Orlando, plus $284 in taxes and surcharges? Link to comment Share on other sites More sharing options...
internet Posted December 16, 2011 Author Share Posted December 16, 2011 Nav Canada and fuel are examples of doing the cost of business for the airlines. GST AIF and security fees are all additional things outside agencies add onto a ticket.Is the compromise allowing airlines to break these out, but they must advertise their total cost of business?Trying to be reasonable here based on everyone's comments. Link to comment Share on other sites More sharing options...
chockalicious Posted December 16, 2011 Share Posted December 16, 2011 In actual fact back when AIFs were just coming in, the airlines lobbied for the right to break down the fare structure so as to ensure their passengers knew just how much of the price was going towards taxes, AIFs etc and not into the pockets of the airlines. I know this for certain as I was directly involved at the time.....The airlines have always had the right to show the breakdown of the taxes and fees. Pre-Sabre I thought the AIF was right on the receipt. The AIF was no secret to lots of travelers as in cities like YQM and YVR you had to pay at security on the way to the gate.Airlines do make some money off AIF as they charge the airports a handling fee. Anyone can go looknat the NavCan website and see what the Nav fee for your flight actually is.Transat has always buried some of their costs in the " taxes and fees" moreso than WS or AC. Link to comment Share on other sites More sharing options...
Guest ACSideStick Posted December 16, 2011 Share Posted December 16, 2011 Jack, Let me know when you see an MDX advertised with $19900 being the all-in cashiers cheques price. In Canada, you cannot buy anything where the price is the actual amount you have to give. The last time you could do that was before there was GST in Alberta. The price on something was the amount of cash required to get it.It is semantics to say a chocolate bar is different than an airline ticket in this regard. Don`t get me wrong, I am all in favour of the total cost being displayed, so long as it shows how much the gov`t and other agencies are skimming from the total price.It is not unusual for the advertised price of a car promotion to go up by as much a 30% more than what the stated sale or lease price is. When you rent a car, though the rate may be just what you are hoping for, the enviromental-airportfee-gst-hst-insurance-insurance waver-overmilage waver etc greatly inflates the cost.The point, of course, is that anytime I buy anything, I do not expect the sticker price to be what I pay.. Link to comment Share on other sites More sharing options...
J.O. Posted December 17, 2011 Share Posted December 17, 2011 In Canada, you cannot buy anything where the price is the actual amount you have to give.The point, of course, is that anytime I buy anything, I do not expect the sticker price to be what I pay..I guess you never buy gas for your car or beer and wine. Yes it's not everything but there are instances where the advertised price is "all in".I'd encourage the airlines to not only show a breakdown of the taxes and fees, but to also show how much those fees would be if they flew out of an airport across the border. It won't ever happen but I'd still like to see it. Link to comment Share on other sites More sharing options...
boestar Posted December 17, 2011 Share Posted December 17, 2011 We have relatives come over from the UK on a regular basis and it still confuses them that the advertised price for ANYTHING isnt the actual price you pay. in the UK the price on the tag is the price you pay with the VAT etc all rolled in. Personally I prefer it that way. I know I am paying 13% to the government on EVERY purchase and so be it. Far less confusing for the consumer. Link to comment Share on other sites More sharing options...
Thebean Posted December 17, 2011 Share Posted December 17, 2011 I'm renting a car for a day tomorrow. The quoted daily rate is $10.63.The actual daily rate is $20.54.Can we assume the gov't will change the rules as they pertain to rental car agencies as well.........? Review the price Daily Rate 1 day(s) @ CAD 10.63 CAD 10.63 Subtotal CAD 10.63 Taxes and Fees CAD 9.91 Total payment due: CAD 20.54 Link to comment Share on other sites More sharing options...
spreadsheet Posted December 17, 2011 Share Posted December 17, 2011 Airlines do make some money off AIF as they charge the airports a handling fee. After paying the credit card fees (about 2% for Visa and MC and 3% for Amex) and other handling expenses the airlines are lucky to break even dealing with the AIF's. When you factor in the absurd AIF rates in Canada and the elasticity of air travel I guarantee the airlines are big losers here. Link to comment Share on other sites More sharing options...
internet Posted December 18, 2011 Author Share Posted December 18, 2011 Clearly there are examples on both sides. Life is full of double standards. But a $389 fare ending up at $1003.84 is crazy especially when $380 is a fuel surcharge. Link to comment Share on other sites More sharing options...
internet Posted December 18, 2011 Author Share Posted December 18, 2011 So if this is an okay practice, why not sell every fare at $1 and leave $680 is fees. That would get you to the top of the screens Link to comment Share on other sites More sharing options...
Fido Posted December 18, 2011 Share Posted December 18, 2011 Don't get feeling sorry for the consumer that promoting airfares has gotten into this state. The consumer has brought it onto themselves by only reacting to the cheapest price they can find. They cannot co-relate price and value. Link to comment Share on other sites More sharing options...
chockalicious Posted December 18, 2011 Share Posted December 18, 2011 After paying the credit card fees (about 2% for Visa and MC and 3% for Amex) and other handling expenses the airlines are lucky to break even dealing with the AIF's. When you factor in the absurd AIF rates in Canada and the elasticity of air travel I guarantee the airlines are big losers here.I guarantee they are not. Link to comment Share on other sites More sharing options...
chockalicious Posted December 18, 2011 Share Posted December 18, 2011 What numbers do you have re the AIF, net return to the airlines after the cost of collecting / remitting?A high enough handling charge that it is not insignificant. Link to comment Share on other sites More sharing options...
spreadsheet Posted December 18, 2011 Share Posted December 18, 2011 Depends on the airport, last time I saw the larger ones were 3-4% and I believe it went as high as 6-7% for the smallest ones. Link to comment Share on other sites More sharing options...
chockalicious Posted December 19, 2011 Share Posted December 19, 2011 Talking from fact however will be declining to provide specific numbers. Link to comment Share on other sites More sharing options...
spreadsheet Posted December 19, 2011 Share Posted December 19, 2011 Talking from fact however will be declining to provide specific numbers.Even if the airlines 'make' a little money off the handling fee after paying credit card fees on the full AIF amount and all of the workforce and other handling costs to pass the airports a cheque every month, the real cost is the overall loss of business for Canadian airlines. Like I said before, airline travel is elastic and the high AIF's at Canadian airports are just another thing that pushes travellers to the US airports or alternative forms of travel. $25 each way for a family of 4 becomes $200 just for AIF's, easy to see how it can deter people from flying.I'm all for all in pricing when it comes to things like fuel surcharges, but when the airlines have to collect a fee on behalf of someone else I think it should be broken out. Link to comment Share on other sites More sharing options...
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