Understanding Airfare- What Makes it Expensive?

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We travel by air more than ever before in human history! And, it is true that prices are getting cheaper, but it often seems like airfare is expensive and it is not as good of a deal as we imagine it to be. Even more, sometimes it is ridiculously expensive. For example, I wanted to go to New Orleans (from Seattle), when I checked the airfare for about a month or more before, the price was $789. This is a price that I can hardly justify since I can get cheap flights to Hong Kong for about $450-$500 round trip. So, flying to much closer domestic destinations for so much money didn’t seem like a good deal to me.

So I asked myself Why is Airfare Expensive? Following, I did some research that I will share with you. Understanding Airfare will be our base camp for all of our tips and tricks that we will present to you in our efforts to beat the hegemony of expensive airfare and ultimately book some cheap flights to beautiful destinations.

The Experience of Booking Airfare

For many reasons, booking a flight can be a daunting experience. And it is merely because nowadays the world wide web has transformed marketing into a lucrative way to maximize profit and eventually tear a hole in your pocket. Having said that, it doesn’t mean that you should be compliant with the system! I am indeed not, and I will strongly urge you not to be too. Through knowledge and becoming a bit lucrative like those giants American Airlines or Emirates, for example, you can maybe get a few dollars off your otherwise overly expensive airfare and sing with happiness. 

Check out our most beloved Travel Resources that we always use!

What Shapes the Airfare price?

Airfare as a Product and How Base Fare takes Shape

First, and the most important thing that you need to remember is that airfare is a product like any other. Just like cherries for example. Cherry harvest season is the summertime, meaning that most likely cherries during the summer will be, of course, freshest but also cheapest. If you try to buy cherries at the end of the winter or beginning of spring, the price you pay might be stuck in your throat for a while. 

That means that the base fare will be subject to seasonal trends and its price will be shaped by one of the core principles of Economy- the higher the demand is, the higher the price might be, even if the supply does not increase, which is unlikely to happen. For example, the peak season for Hawaii is between June and August. More people want to find escape in the Pacific islands, which creates more demand. On the other hand, airlines respond to that with an increased number of flights to Hawaii. But does the airfare get cheaper when there are more flights? The answer is no because airlines know that you might be inclined to pay the higher price in that season, just like if you are craving cherries on Christmas day, you are ready to pay $9 a pound.

Bottom line, those trends profoundly influence what is called your base fare, the price of an airline ticket before fees and taxes are added.

What Does the Price of Your Ticket Include?

The key to understanding airfare is to take a look at a ticket price breakdown. Most often the ticket prices include: your Base Fare + plus any additional Taxes and Carrier imposed fees such as airport taxes, fuel surcharges, service and check-in fees. 

Airport Tax

Simply put, an airport tax is a tax paid to the airport by each passenger for passing through and using the airport. The price, of course, varies from airport to airport depending on how big or small it is, capacity and passenger stream. The Revenue from airport taxes fund is used for facility maintenance. Even Diplomats are not exempt from that tax. 

Fuel Surcharge

Originally, fuel surcharges were added to the ticket price to make up for the constant changes in the cost of fuel, which is the most significant item of expenditure for airlines. The amount charged may vary from one airline to another. This variation is due to the fuel agreements in place at different airlines. 

There is a catch though. When oil prices bottomed out in 2015, we expected that companies will start removing those taxes. This didn’t happen, they just changed the name of the tax and fancied it. Some of them now call it international or domestic charges. For example, Alaska Airlines which runs their frequent flyer program called Mileage Plan doesn’t add fuel surcharges to partners except for the following airlines: British Airways and Icelandair. So, it seems like, the fuel surcharges are not going away anytime soon. Another win for the airlines.

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Other Taxes

They are many different taxes that can be charged and included in your total airfare that can rack it up and make it expensive, but unfortunately, those are not in our control at all since most of them are government imposed. Some of those taxes are U.S. Excise Tax, U.S. Federal Segment Fee, September 11th Security Fee, U.S. International Transportation, U.S. Customs User Fee, U.S. Animal and Plant Health Inspection Service Fee, U.S. Immigration and Naturalization Fee, Singapore Aviation Levy (for Singapore only), International Departure Taxes.

Service Fees

Most airlines collect a different set of service charges, and they greatly vary. We can possibly classify them into two main categories- on board and check-in fees.

Check- in Fees

First, we are going to look at the airport check-in fees. Here we can include everything from checked and oversized baggage, pet transportation fees, change or cancellation fees to early seat selection fees. Every company has its own price list for all of the above or even more. For example, some low-cost airlines can charge you an extra fee for priority boarding. A lot of those fees are generally not included in the price you see online, but its great to check with the airline their price if you think that you might be subject to one or more of those fees and you can calculate the final price correctly.

On Board Fees

Other very common fees that we all have paid at least once are on board fees. Flying east coast and can’t sleep? If you like movies probably you watched 1 or 2, and you paid for them, so you paid an in-flight infotainment fee. Other fees can be associated with the use of WiFi connection or purchasing food and beverages.

Summing up

Hopefully, that sheds some light over the problem of expensive airfare. Even though there are a lot of moving elements, which generally denotes flexibility, in compiling a total for your airfare, we have little control on almost all taxes. What we have control over, however, is the base fare. Not that we could literally change it or make it cheaper but we could use some booking techniques which could give a better starting point, so when all the fees and taxes are added the airfare is still a good deal. Our next article from the series Airfare Basics will be on PRO Airfare Tips. Stay tuned and Happy flying.

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Hi there! I’m Atanas — I’ve been traveling around the world since I was 15, so about 12 years, but just recently got into writing. My mission is to inspire more people to take on the journey of their lives and spread the word that traveling the world can be easy, fun and not cost a fortune!

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