Grim forecast for airport taxes, levies

Published Sep 20, 2010

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The cost of airfares is skyrocketing, with airport taxes sometimes costing more than the actual airfare - while an airfare can change within minutes.

And it's only going to get worse with Airports Company SA (Acsa) having applied for a 132 percent increase for the passenger service charge - which is only a portion of airport tax.

One upset passenger said he was quoted R4 390, with taxes and levies of R5 150, for a return flight to London from Durban.

While airlines said taxes and charges exceeding the cost of the base airfare were generally only found attached to discounted airfares, the "taxes and levies" added on to any base fare do substantially increase the final cost - whether it was a special or not.

And the general perception by the public is that anything labelled "tax" has to be paid.

According to the International Air Transport Association, the body governing worldwide airline sales, there are more than 600 different airport taxes, charges and fees.

In South Africa, airport taxes include an array of costs that vary from airline to airline. The most common components are: the passenger service charge, which accrues to Acsa; a Civil Aviation Authority (CAA) charge; an air passenger tax; VAT; an Aviation Co-Ordination Services charge; an airline aviation insurance premium; and an aviation fuel surcharge.

And it is the fuel surcharge which can add a hefty extra on to the ticket price, especially with international carriers.

British Airways' Stephen Forbes said the fuel surcharge was introduced when fuel costs soared to more than $100 a barrel. "Fuel is one of the airline's largest costs and there are two ways of offsetting this - either including it in the base fare, or adding it as a separate fuel surcharge and when it was introduced as a separate surcharge, airlines were being transparent in revealing costs to customers."

Mango spokesman Hein Kaiser said the airline did not charge a fuel levy at all, saying that "the airline's revenue management lies within the base fare", while 1Time's spokeswoman, Anya Potgieter, said passengers must ensure they were paying VAT calculated on the fare only, which should not include airport tax or the fuel surcharge.

"The legacy carriers tend to hide their fare increases in their airport taxes," she said.

While SAA could not be contacted, BA strongly dismissed allegations of hiding its charges, saying all their taxes and levies were each listed separately for passengers.

Acsa's Solomon Makgale said the airports company was a commercial enterprise with the government as one of its shareholders.

"Acsa levies a passenger service charge (PSC) on departing passengers - a charge which is regulated by an independent regulator. Airlines should reflect this charge separately on their booking systems and tickets, but often include the PSC as part of other regulated and non-regulated charges under a the heading 'Airport taxes'.

"This creates the perception that all 'airport taxes' are either collected on behalf of the airport or government, which is not the case. Only the Acsa PSC and the CAA's safety charge are charges that are collected on behalf of Acsa and the CAA. The remainder, except for VAT, are airline costs," he said.

He added that the application for a 132 percent increase was reflective of the company's R16-billion five-year infrastructure programme.

"We are at the end of the five years and we do not increase tariffs until the investment is completed.

"The application has been made and the minister of transport has appointed an advisory committee to revert to him by the end of September," said Makgale.

He said the proposed increase was not because of the World Cup investment, which "happened to coincide with the investment programme, which was undertaken due to double-digit growth".

With regard to the massive fluctuation in prices, all the airlines said the industry worked on a yield management system of pricing, based on the earlier a seat is booked, the lower the price - or as Kulula's Heidi Brauer confirmed "any one flight can have more than 20 prices".

And the forecast on additional charges is grim, with Brauer saying "rapidly increasing airport taxes are the biggest threat to air travellers in this country".

But South Africa is not alone. Forbes said in the UK, an increase in an air passenger duty levied on customers departing from the UK is due in November.

All the airlines advised passengers to get an inclusive quote and ask for details on all costs above the base airfare to avoid surprises.

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