Don't be fooled

Fees, taxes & surcharges are not created equal

Take off eh.comFees, taxes and surcharges are a fact of life. When you buy a car, you know that the sticker price is going to cost you a lot more by the time you drive off the lot. The travel industry operates in the same way. If you think you found a great airline seat sale or last minute deal – take out your calculator before you run out and buy that guidebook and some sunscreen. That isn’t to say that bargains don’t exist, but taxes and surcharges can make a big difference between what appears to be a deal and what you actually pay as the final price.

In today’s tough environment, travel companies are having to resort to more creative marketing techniques to get the edge over their competitors. The growth of the internet has encouraged companies to advertise “stripped down” specials because many online operators have booking engines that list the cheapest price first. Obviously it is an advantage to be featured prominently on these sites. But the top lead-in price does not necessarily mean it is the best deal. That’s where you have to do your homework. You have to consider the taxes, fees and surcharges and these tend to vary widely — which makes for frustrating comparisons. A good travel agent should also know where the best deals really are and what the impact of the added fees are on your final tab.

Airlines have become masters at advertising great seat sales. But the list of added taxes, fees and surcharges makes the job of choosing the carrier difficult since these charges vary per airline.

What are all the fees for and who gets them? The airlines have no control over the taxes but they do determine their own fuel surcharges and some fees. The example below charts the various taxes and surcharges you would have to pay if you chose Air Canada, KLM or British Airways from Toronto to Prague. Air Canada had the cheapest fare but after tallying the add-ons, they scored less favourably. KLM had the best deal to Prague by over $200 per person. (see chart below)

This comparison is for illustrative purposes only and there are many destinations where Air Canada and British Airways are highly competitive. As a buyer, it is important that you do comparisons of several carriers to determine the best deal. Some airlines build the fuel surcharges into their fare, whereas others prefer to add it to their taxes.

Checking the taxes and surcharges with tour operators is a much more daunting task but, like the airlines, they are subject to certain government taxes that they can’t avoid. Non-tax fees and surcharges are a different matter, and here again, some operators include these fees in their prices and some add them as extras. Like the airlines, you can’t look at the base price and assume that it is the cheapest deal. You need to look at all the costs before making a decision.

Also check room categories and how much is included in the package (meals, etc.). If you’re dealing with a travel agent, make sure the quotes include all taxes and surcharges before making your comparisons. A comparison of three operators from Toronto to Las Vegas staying at the same property on the same dates in December reveals taxes and surcharges on Westjet Vacations at $124, Air Canada Vacations at $158 and Sunwing Holidays at $240. Add these to the lead in price before saying yes!

When buying a cruise, the list of taxes and surcharges is extensive. The most common are: government taxes, cabin tax, customs fees, dockage, head tax, immigration fees, harbour taxes, terminal taxes, fees based on tonnage etc. Port taxes are not included in taxes and fees and are now included in the base price. Other taxes are itinerary and ship dependant. Here are a few tax samples for a one week Alaska cruise in June : Holland America – $134, Royal Caribbean – $197 and Norwegian Cruise Line – $180. The differences are much less pronounced than with the tour products.

One big issue with the cruise lines is that there is always the possibility of a fuel surcharge. Each line reserves the right to impose one should fuel go above a certain benchmark price per barrel. The collection for the charge may take place at the time of sailing, even though the cruise was already paid in full.

With all these taxes and surcharges to contend with, it is no wonder the consumer is not only confused, but rightfully irritated. Travellers have become an easy target for tax grabs from a variety of government and airport operations. As for the surcharges and fees imposed by the industry, there is, as yet, no consistency or regulation on what can and can’t be added to your final trip price. This makes price comparisons very challenging, so, be sure to do your homework before booking that trip of a lifetime!

Photo Credits: TommL, AdamG1975

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.