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Preet Banerjee

353 more days of airfare pricing insanity Add to ...

The price at the pump is heavily scrutinized and bemoaned as it is, but imagine if the road-side signage indicated only part of the overall cost of a litre of fuel and the only way you could find out the total cost was to wait until you had to pay for what you wanted. You saw a posting of $1 per litre so you pulled in and filled up with 50 litres. You expected a charge of $50, but it ended up being $73.70. People would go mental.

I just looked up the final price of a round-trip airfare from Toronto to Charlottetown which was advertised at $99 each way on Air Canada’s website. One would do some quick mental math and expect 2 x $100 plus tax would be about $226. But the final price after going through the motions of picking departing and return dates and times was $329.77. That’s 47.39 per cent more than just the quoted airfare plus 13 per cent HST.

Among some of the charges that may not show up in the online advertised base fare:

  • Fuel surcharges
  • NAV Canada surcharge
  • Insurance surcharge
  • Air Travellers Security Charge
  • Airport Improvement Fee

The NAV Canada surcharge is explained as being “collected to cover the fees that Air Canada pays to NAV Canada to operate Canada’s Air Navigation systems.” This is clearly just a cost of doing business but for some reason it’s allowed to be shown as an after-the-fact expense on top of the advertised price.

Gasoline prices are one of the few areas where the tax is factored into the advertised price, but there are many costs of doing business to get the stuff from the ground into your tank including:

  • Crude oil costs
  • Refining costs
  • Pipeline freight
  • Trucking freight
  • Marketing and overhead
  • Dealer Margin
  • Multiple layers of taxes in addition to GST or HST

Imagine seeing an itemized breakdown for each line added to the bill after being drawn in by a low, curb-side advertised price. I repeat: people would go mental.

Almost five years ago how airlines advertised prices was supposed to change with the airfare advertising clause of the Canada Transportation Act. Arguments over unfair advantages for carriers in other countries servicing Canada who would not be subject to the same requirements led to delays in the implementation. But just before Christmas, it was announced that this would finally come to an end, by the end of this year. I’m not too sure what the reasoning behind this additional delay is, but the fact it is going ahead is certainly welcome.

Let’s hope that after 353 more sleeps I can stop going mental on airfare advertising.

Preet Banerjee, BSc, FMA, DMS, FCSI is a W Network Money Expert, and blogs at wheredoesallmymoneygo.com . You can also follow him on twitter at @PreetBanerjee

Follow on Twitter: @preetbanerjee

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