At Travelstart we always include all taxes in ticket prices, but we’ve all fallen victim to it before, a travel agent or airline telling you about some amazing fare like R3000 to London, you can’t believe your eyes until you notice the little asterisk at the end of the price pointing you to the fine print. Hidden down there, you notice “price excludes approximate taxes of R3500” and the price suddenly jumps up to R6500 – not so great any more. What exactly are you paying for in taxes? Some people call them “airport taxes”, this is in fact a fallacy, only a very small portion of the tax goes to the airport. Let’s have a closer look:
Domestic ticket taxes
A certain ticket from Johannesburg to Cape Town, return, has a fare of R1820 plus taxes totaling R875, but what do these taxes cover? Basically it is as follows:
- R255 VAT on the ticket ( 14% of R1820 fare which the government takes)
- R172 passenger service charge (which the airport takes)
- R22 passenger safety charge (goes to the Civil Aviation Authority to pay for “safety promotion activities” like pilot training exams/programs)
- and R426 fuel surcharge (this is a complicated one I’ll explain later).
International ticket taxes
A ticket to London has a fare of R3140 and taxes of a huge R2902, what is it you’re paying for here?
- R11 passenger safety charge (as above)
- R150 South African departure tax (to the government)
- R198 South African passenger service charge
- R858 British departure tax (to the government)
- R263 British passenger service charge (to the airport)
- and a whopping R1422 fuel surcharge.
The fuel surcharge
Information on the fuel surcharge is very hard to come by, sometimes “no longer available” or just not mentioned at all, so here is my understanding of it based on feedback from my colleagues in the travel industry.
In 2001, September 11th happened and a war began, airlines were a bit panicky about compensation they may need to pay to passengers for future attacks and began charging a security fee (war tax). Fuel had always been covered in the fare but as the wars expanded to Iraq and fuel prices began to soar, airlines were worried about it climbing even more. They bulk bought their fuel at moderately higher “future prices” – basically estimating what the price might climb to going forward.
Problem is, the fuel price didn’t go up as much as expected and they lost out. To recoup costs, a fuel surcharge was levied and coupled with the security fee – built into the fare of the ticket. The issue was then that airlines paid travel agents commission on fares, meaning they were paying commission on their surcharge and losing out extra money. To counter this many airlines removed the charge from the fare and added it to the taxes.
So that in short, according to my sources, is what you’re paying for in taxes.
Image from Angela Sabas on Flickr.