New Rule for Airlines Only: Advertise Your Taxes

CHARLOTTE, N.C. (TheStreet) -- Today we present a list of all of the U.S. industries that are required to include taxes and fees in their advertised prices:

Airlines.

Yes, it's a fact: this list includes only one. That's because starting on Jan. 26, the Transportation Department will impose new regulations requiring airlines to include taxes and fees in their advertised fares.

The ruling reflects the anti-airline hysteria that pervades our country. Our government has chosen not to respond to public outrage over its inability to balance its budget by raising revenues and cutting spending, but rather to respond to consumer resistance to the high taxes and fees imposed on the purchase of airline tickets.

There is little wonder that consumers don't like the high taxes and fees. Airlines don't like them either. Various government agencies -- including airports -- impose taxes and fees equivalent to about 20% of the price of each ticket. Now the transportation department wants airlines to advertise as if these charges are part of the ticket price.

That way, maybe no one will realize that a lot of the money spent on airline tickets does not actually go to the airlines.

On United's (UAL) third-quarter conference call, CEO Jeff Smisek said that about 20% of the cost of a typical airline ticket goes to taxes. He said that airlines paid 17 different fees totaling $16.5 billion in 2010. He said airlines are taxed more heavily than alcohol and cigarettes. "We are taxed as a sin," he said. "We are not a sin."

The odd thing is that this type of regulation does not apply to any other industry. Hotel guests generally pay high taxes, on the theory that the tax is levied on "people from out of town" who don't involve risks to the politicians who impose them. But these taxes are not included in advertised rates.

Every week, our grocery store publishes a circular with its prices, but it does not include sales tax in the prices. Mattress retailers advertise in fliers that list prices not including taxes or, for that matter, delivery fees. It is as if consumers carry their new mattresses home on their backs.

And by the way, can someone please explain what is included in our cell phone company's advertised rate? Anyone?

"There is no justification for treating air travel differently from just about everything else that consumers purchase," said Southwest (LUV) spokeswoman Brandy King. "They pay for the price of goods and services and then pay tax -- that's how everything is advertised. Forcing airlines to include taxes will also make air travel look more expensive, when in reality it's not."

But wait! The DOT also has even more regulations for airlines, including a 24-hour period for free cancellations (many airlines already provide this), prompt notification of delays (many airlines already do this) and consistent baggage fees throughout a trip -- even when traveling on different airlines.

It's a fact that making travel easy for passengers is a worthy goal, one that airlines, government and passengers all share.

The question is whether the government should be involved in singling out an industry and uniquely applying regulations that aren't applied anywhere else.

-- Written by Ted Reed in Charlotte, N.C.

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