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Good Bye To "before Taxes" Fares On EU  
User currently offlineUPPERDECKFAN From Spain, joined Jun 2007, 992 posts, RR: 1
Posted (5 years 10 months 1 day 17 hours ago) and read 5725 times:

Today a new EU regulation comes in place that mandates every EU based web site (carriers and travel agencies) to publish final fares only so no more "pre-surcharges" at any point of purchase.

It also eliminates the trick of "pre-ticked" options as travel insurance that you have to deselect to disable them.

http://www.elmundo.es/mundodinero/2008/10/31/economia/1225468300.html


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25 replies: All unread, showing first 25:
 
User currently offlineBuyantUkhaa From Mongolia, joined May 2004, 2897 posts, RR: 3
Reply 1, posted (5 years 10 months 1 day 16 hours ago) and read 5643 times:

That's very welcome news indeed!

Good riddance..



I scratch my head, therefore I am.
User currently offlineRunway24R From United Kingdom, joined May 2007, 47 posts, RR: 0
Reply 2, posted (5 years 10 months 1 day 16 hours ago) and read 5588 times:

Finally!! I wondered when the EU would sort this one out. Long over due, but great news all the same!!  Smile


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User currently offlineAirbazar From United States of America, joined Sep 2003, 8310 posts, RR: 10
Reply 3, posted (5 years 10 months 1 day 15 hours ago) and read 5568 times:

Is it a EU based web site or a web site of a EU based company? Those are 2 very different things. If I'm Ryanair I can outsource my web site to a company in India so now my web site is no longer EU based. So what is the exact wording and interpretation of the law?

This is also very interesting:
"En cuanto a las condiciones, se eliminan también los "favoritismos" por razón de lugar de origen o residencia. Así, un billete para una plaza de un determinado vuelo deberá costar lo mismo independientemente del Estado miembro desde el que se adquiera."
It basically says that airlines can't discriminate fares based on point of sale or origin. This is huge because it significantly limits the current revenue management process that airlines use. For example, more people living in London can afford a higher fare than people living in Budapeste, and airlines know this.


User currently offlineNG1Fan From Australia, joined Aug 2007, 446 posts, RR: 0
Reply 4, posted (5 years 10 months 1 day 15 hours ago) and read 5547 times:

About time - Ryanair take note!

NG1Fan


User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3805 posts, RR: 29
Reply 5, posted (5 years 10 months 1 day 13 hours ago) and read 5399 times:



Quoting Airbazar (Reply 3):



Is it a EU based web site or a web site of a EU based company? Those are 2 very different things. If I'm Ryanair I can outsource my web site to a company in India so now my web site is no longer EU based.

Good point. Seems like it will only be a matter of time before EU airlines who are so inclined figure out loopholes to carry on with their legalized deception and fraudulent representations...just like airlines in the U.S. There will no doubt be some technicalities found in the way that the regulations are written that will mean nothing really changes -- only the manner in which the same or similar deceptions are worded and/or presented.


User currently offlineBuyantUkhaa From Mongolia, joined May 2004, 2897 posts, RR: 3
Reply 6, posted (5 years 10 months 1 day 13 hours ago) and read 5385 times:



Quoting Airbazar (Reply 3):
Is it a EU based web site or a web site of a EU based company?

It is any airline offering air services within or from the EU.

Further reading:
http://www.euractiv.com/en/transport...rline-flight-prices/article-176810
http://europa.eu/rapid/pressReleases...&aged=0&language=EN&guiLanguage=en
And the Regulation itself:
http://eur-lex.europa.eu/LexUriServ/...uri=OJ:L:2008:293:0003:0020:EN:PDF

it says that

Quote:

Information and non-discrimination
1. Air fares and air rates available to the general public shall include the applicable conditions when offered or published in any form, including on the Internet, for air services from an airport located in the territory of a Member State to which the Treaty applies. The final price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as all applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. In addition to the indication of the final price, at least the following shall be specified:
(a) air fare or air rate;
(b) taxes;
(c) airport charges; and
(d) other charges, surcharges or fees, such as those related to security or fuel;

where the items listed under (b), (c) and (d) have been added to the air fare or air rate. Optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the
customer shall be on an ‘opt-in’ basis.

2. Without prejudice to Article 16(1), access to air fares and air rates for air services from an airport located in the territory of a Member State to which the Treaty applies, available to the general public shall be granted without any discrimination based on the nationality or the place of residence of the customer or on the place of establishment of the air carrier's agent or other ticket seller within the Community.




I scratch my head, therefore I am.
User currently offlineRussianJet From Belgium, joined Jul 2007, 7701 posts, RR: 21
Reply 7, posted (5 years 10 months 1 day 13 hours ago) and read 5351 times:
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How about card fees? I assume they won't be included as they vary depending on the card used. So, let's just sit back and watch them rise and rise.....


✈ Every strike of the hammer is a blow against the enemy. ✈
User currently offlineJoost From Netherlands, joined Apr 2005, 3167 posts, RR: 4
Reply 8, posted (5 years 10 months 1 day 12 hours ago) and read 5288 times:



Quoting Airbazar (Reply 3):
It basically says that airlines can't discriminate fares based on point of sale or origin. This is huge because it significantly limits the current revenue management process that airlines use. For example, more people living in London can afford a higher fare than people living in Budapeste, and airlines know this.

This ruling is still in place for a couple of years. It means that a ticket BUD-LHR-JFK cannot be sold for different prices depending on the point of sale of the same ticket. However, it does not mean that LHR-JFK may not be more expensive than BUD-LHR-JFK: this is a different product.


User currently offlineAirbazar From United States of America, joined Sep 2003, 8310 posts, RR: 10
Reply 9, posted (5 years 10 months 1 day 10 hours ago) and read 5146 times:



Quoting Tango-Bravo (Reply 5):
Good point. Seems like it will only be a matter of time before EU airlines who are so inclined figure out loopholes to carry on with their legalized deception and fraudulent representations...just like airlines in the U.S.

In the US it is acceptable because it is standard procedure to not include tax in the price on anything, not just airplane ticket. You walk into any store and none of the shown prices include taxes.

Quoting BuyantUkhaa (Reply 6):
It is any airline offering air services within or from the EU.

Thank you. That makes a lot more sense.


User currently offlineYULWinterSkies From United States of America, joined Jun 2005, 2178 posts, RR: 5
Reply 10, posted (5 years 10 months 1 day 10 hours ago) and read 5122 times:



Quoting Airbazar (Reply 9):
In the US it is acceptable because it is standard procedure to not include tax in the price on anything, not just airplane ticket. You walk into any store and none of the shown prices include taxes.

Right (& unfortunately, IMO), with exceptions such as gas. But airline taxes are not sales taxes which are a x% of the retail values, but rather fixed fees (airport, security, fuel...). There is no sales tax on airline tickets as far as i understand.



When I doubt... go running!
User currently offlineFlyingclrs727 From United States of America, joined Apr 2007, 733 posts, RR: 0
Reply 11, posted (5 years 10 months 1 day 9 hours ago) and read 5091 times:

This stinks. It's just a way for the EU bureacracy to make taxes less visible.

User currently offlineViscount724 From Switzerland, joined Oct 2006, 25156 posts, RR: 22
Reply 12, posted (5 years 10 months 1 day 9 hours ago) and read 5057 times:



Quoting Airbazar (Reply 3):
It basically says that airlines can't discriminate fares based on point of sale or origin. This is huge because it significantly limits the current revenue management process that airlines use. For example, more people living in London can afford a higher fare than people living in Budapest, and airlines know this.

You are misunderstanding the EU directive. It has nothing to do with preventing fares from more distant points undercutting fares from closer points (BUD vs LHR for example). That is entirely up to the airline's revenue management policy. They often have to charge lower fares from more distant points to remain competitive considering that they may also be competing against nonstop/direct service with less attractive connecting service.


User currently offlineTheSonntag From Germany, joined Jun 2005, 3570 posts, RR: 29
Reply 13, posted (5 years 10 months 1 day 9 hours ago) and read 5049 times:



Quoting Flyingclrs727 (Reply 11):
This stinks. It's just a way for the EU bureacracy to make taxes less visible.

No it is not. It is to boost competitition and to protect customers by stopping the tactics to disguise the final price.

Some companies even declared a fuel surcharge to be tax, which it clearly isn't.

So it is a good decision.


User currently offlineCityofAthens From , joined Dec 1969, posts, RR:
Reply 14, posted (5 years 10 months 1 day 8 hours ago) and read 4991 times:



Quoting Flyingclrs727 (Reply 11):
This stinks. It's just a way for the EU bureacracy to make taxes less visible.

Depends on whether the seller chooses (or is required) to display a break-down of the "tax" on the ticket at time of purchase.

All of the tickets I have purchased in the UK have clearly displayed a break-down of the various fees payable in addition to the basic fare.

So in general I would say it's a welcome move.

As much as I love America (and I don't say that insincerely) I really hate this business of displaying prices exclusive of tax ... I'm only interested in the price I have to actually pay for my coffee!


User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3805 posts, RR: 29
Reply 15, posted (5 years 10 months 1 day 8 hours ago) and read 4944 times:



Quoting YULWinterSkies (Reply 10):
airline taxes are not sales taxes which are a x% of the retail values, but rather fixed fees (airport, security, fuel...).

Any revenue ticket for domestic flights within the U.S. (including Alaska and Hawaii) are subject to a 7.5% (percent) federal tax, based on the pre-tax/base fare paid. Tickets for flights between Alaska and Hawaii and the continental U.S. are subject to a fixed U.S./"over-the-water" tax of about $7.70 each way (cannot confirm the amount since I lack ready access to confirming the exact amount...I recently retired from my airline job Smile) plus a small U.S. percentage tax (typically between 0.7 to 4.0%) that varies with city pairs ticketed, which seems to be at least somewhat relative to distance between city pairs. On international flights to/from the U.S., the only U.S. tax that applies is the fixed amount of about $7.70 each way, regardless of the base fare amount.

As far as I know based on what I have seen, all U.S. airlines include applicable U.S. taxes in the advertised fare inasmuch is this is an tax amount that can be precisely calculated on the basis of the base fare $ amount.

Except for the base fare and U.S. tax(es) shown "up front" all other charges are not taxe, but rather fees that will vary, depending on the routing of flights booked and are therefore added only after the specific routing, number of segments, connection city(ies), and per ticket maximum amounts allowed for some fees can be known.

Simple enough concepts for one who calculates taxes/fees "in a day's work" as I did (...before retiring) but not so much so for the customers paying the taxes/fees. Nonetheless, less than 1 in 100 customers ever seemed to question the taxes/fees that apply to their tickets -- they seem to have an "it is what it is" view of taxes/fees apllicable to airline tickets purchased or re-issued in the U.S.


User currently offlineBuyantUkhaa From Mongolia, joined May 2004, 2897 posts, RR: 3
Reply 16, posted (5 years 10 months 1 day 8 hours ago) and read 4892 times:



Quoting Airbazar (Reply 3):
It basically says that airlines can't discriminate fares based on point of sale or origin. This is huge because it significantly limits the current revenue management process that airlines use. For example, more people living in London can afford a higher fare than people living in Budapeste, and airlines know this.

Point of sale, indeed not. But point of origin, not sure...

Quote:
2. Without prejudice to Article 16(1), access to air fares and air rates for air services from an airport located in the territory of a Member State to which the Treaty applies, available to the general public shall be granted without any discrimination based on the nationality or the place of residence of the customer or on the place of establishment of the air carrier's agent or other ticket seller within the Community.

Mind you it does not say "flight origin".

You could argue that a ticket LHR-BUD-LHR is a different product from BUD-LHR-BUD and may therefore be priced differently. What is not allowed now is someone from London paying more for the exact same ticket than a Budapest resident.



I scratch my head, therefore I am.
User currently offlineJonjonnl From UK - England, joined Dec 2007, 135 posts, RR: 0
Reply 17, posted (5 years 10 months 1 day 2 hours ago) and read 4193 times:



Quoting CityofAthens (Reply 14):
I'm only interested in the price I have to actually pay for my coffee!

I agree. In the United States I always feel disappointed when I'm paying for the stuff I buy because "it's not that cheap" after all. Probably Americans are used to this and account for taxes while buying but we're not used to that here in the Netherlands.

I welcome this decision too.



joão in ncl
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7471 posts, RR: 17
Reply 18, posted (5 years 10 months 1 day 1 hour ago) and read 4073 times:



Quoting NG1Fan (Reply 4):
About time - Ryanair take note!

Ryanair's biggest base is STN in the UK. And the EU law has been in force as British law since February 2007. Initially FR and several others (but not the main scheduled carriers like BA, BD and VS) failed to comply. So the Office of Fair Trading extended the dead line for compliance to first April and then July 2007. But FR still pleaded that they had insufficient time to redesign their web site. So they were given a further extension to February 2008 at which time I believe that they came into compliance.

Note here that the ultimate sanction a government has to enforce the law is to ground the airline's operations in its country. But it is far easier for a British government to impose such a sanction on a British airline that it is for them to impose it on a non-British airline like FR.

Quoting Tango-Bravo (Reply 5):
Good point. Seems like it will only be a matter of time before EU airlines who are so inclined figure out loopholes to carry on with their legalized deception and fraudulent representations...



Quoting RussianJet (Reply 7):
How about card fees? I assume they won't be included as they vary depending on the card used.

The loophole that FR is now using relates to credit and debit cards although what they are doing is not fraudulent.

If you book and pay for an FR flight with a VISA ELECTRON debit card there is no charge for using the card. If you book and pay with any other debit or credit card there is a £4.00 charge not for using the card but for every flight booked and paid for.

So on a BBC programme recently there was the story of a football team and its supporters booking a return flight on FR. All the tickets for the 43 travellers were booked and paid for together and the total additional charge (for not using a VISA ELECTRON debit card) came to £344 (43 passengers times two flights each times £4.00 a flight), a totally extraordinary charge for using a card for a single transaction.

However since the purchaser could have used a VISA ELECTRON card the £4.00 charge per flight was legal even though it was not shown in the all-inclusive price. (According to the BBC programme 20 per cent of UK residents have a VISA ELECTRON card and according to MOL of FR in the same programme around 40 per cent of FR customers pay for their tickets with a VISA ELECTRON card. So here the moral is "get a VISA ELECTRON card" if you plan to fly with FR.

Note here that if FR carries 50 million passengers a year and 60 per cent of their flights are not paid for with a VISA ELECTRON card then FR's total card charge income will be a not insignificant £120 million or possibly more than their likely profit in the current difficult year.

Of course there are other "options" apart from not using a VISA ELECTRON card that airlines could use to get around the law. One is checked luggage. Not every passenger will check a bag so this is optional and I assume may be charged for. Another could be a carry on bag - another "option" for each and every passenger (although I doubt that the authorities would allow a given airline to make a charge for both checked and carry-on baggage). And I am sure that the inventive minds in some airlines will come up with others like having different add-on charges not included in the main ticket price for sitting in a window or aisle seat! Indeed the opportunities could be endless.


User currently offlineEDICHC From , joined Dec 1969, posts, RR:
Reply 19, posted (5 years 10 months 1 day 1 hour ago) and read 4041 times:



Quoting VV701 (Reply 18):
Note here that the ultimate sanction a government has to enforce the law is to ground the airline's operations in its country. But it is far easier for a British government to impose such a sanction on a British airline that it is for them to impose it on a non-British airline like FR.

Why would that be? If a carrier falls foul of EU or UK law to the extent where grounding within the UK is warranted I would have thought it was irrelevant where that carrier is based.


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7471 posts, RR: 17
Reply 20, posted (5 years 10 months 1 day 1 hour ago) and read 4009 times:



Quoting EDICHC (Reply 19):
Why would that be? If a carrier falls foul of EU or UK law to the extent where grounding within the UK is warranted I would have thought it was irrelevant where that carrier is based.

I expressed a personal view. My reasoning is that if the British government wished to peanalise a British based operator in this way it can simply do that. But if it decided to take similar sanctions with an airline based in another EU country like Ireland it would probably need to contact the Irish government and at least discuss the matter first before taking action that could effect the Irish economy. This is the only reason that I can come up with to explain why FR was allowed to be in direct conflict with a British law and given three compliance extensions over a period of 12 months (although I must admit that a couple of minor British airlines were out of compliance for around five months and did not have any sanctions taken against them).

And I have just realised that when I related the story of the 43 footballers and their supporters in Reply 18 I forgot to mention that the cost of the tickets in an FR winter sale was £0.01 each flight. So the total cost of the return tickets was £0.86 and the card card surcharge was (at £344) 400 per cent which bears no relationship at all to the actual cost to FR.


User currently offlineHZ747300 From Hong Kong, joined Mar 2004, 1665 posts, RR: 1
Reply 21, posted (5 years 10 months 21 hours ago) and read 3542 times:
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Quoting Jonjonnl (Reply 17):
I agree. In the United States I always feel disappointed when I'm paying for the stuff I buy because "it's not that cheap" after all. Probably Americans are used to this and account for taxes while buying but we're not used to that here in the Netherlands.

I'm an American and I hated this well--I never understood why the final price was not displayed as is in other countries. Having lived in Australia and now Hong Kong (no sales tax), it is much easier to pick something up off the shelf look at the price an know exactly what you are paying. You do get this in most newsstands in New York though.

However, I know that for the GAP for example all the prices are tagged at distribution and tax varies by state & municipality which means they would have to be re-tagged at the stores. So it makes sense that it is not always that way (But grocery stores don't have this excuse as the price is not on the item!).

For airfare in the US, the price always is displayed with tax when searching. For example, Expedia.com or UAL.com even including a breakdown of the fees; whereas the sales price displayed on the front page will never have the taxes & fees with it, just an asterik.

This rule by the EU does not seem that cumbersome, nor does it seem to be a Ryanair killer. The only thing I was concerned with was the EU would mark it harder for Ryanair to differentiate its fare breakdown versus the other full service airlines and perhaps make it easier for those airlines to appear competitive (for example, banning the display of fares).



Keep on truckin'...
User currently offlineAirbazar From United States of America, joined Sep 2003, 8310 posts, RR: 10
Reply 22, posted (5 years 10 months 15 hours ago) and read 2939 times:



Quoting Viscount724 (Reply 12):
You are misunderstanding the EU directive. It has nothing to do with preventing fares from more distant points undercutting fares from closer points (BUD vs LHR for example).

I think you missed my point.

Quoting BuyantUkhaa (Reply 16):
You could argue that a ticket LHR-BUD-LHR is a different product from BUD-LHR-BUD and may therefore be priced differently. What is not allowed now is someone from London paying more for the exact same ticket than a Budapest resident.

That was my point  Smile
This becomes even more interesting if you're dealing with cities that are very close by but in different countried with different economies. For example, an airline could charge 2 different prices for BTS-STN-BTS based on whether you live in Slovakia or Austria. After this rulling that would no longer be allowed, that's my understanding.


User currently offlineConcordeBoy From , joined Dec 1969, posts, RR:
Reply 23, posted (5 years 10 months 15 hours ago) and read 2929 times:



Quoting HZ747300 (Reply 21):
it is much easier to pick something up off the shelf look at the price an know exactly what you are paying.

Initially... but doesn't really make a difference if you've been doing it for years on end or all of your life.


User currently offlineRevelation From United States of America, joined Feb 2005, 12448 posts, RR: 25
Reply 24, posted (5 years 10 months 14 hours ago) and read 2840 times:



Quoting Airbazar (Reply 9):
In the US it is acceptable because it is standard procedure to not include tax in the price on anything, not just airplane ticket. You walk into any store and none of the shown prices include taxes.

Indeed they include the cost of several taxes such as business profits tax, employment tax, property tax, etc.

The point I'm trying to make is that it's costly to keep changing price tags whenever taxes change. Right now we don't list the price of every tax that comprises the price paid.

Presumably this is easier for airlines, since they are already changing prices in real time all the time due to yield management, etc.

Quoting HZ747300 (Reply 21):
However, I know that for the GAP for example all the prices are tagged at distribution and tax varies by state & municipality which means they would have to be re-tagged at the stores. So it makes sense that it is not always that way (But grocery stores don't have this excuse as the price is not on the item!).

I vaguely recall being in the UK in the pre-EU days and being told that VAT was not included in sticker prices. How is VAT currently handled in the UK and the EU?



Inspiration, move me brightly!
User currently offlineDLD9S From United States of America, joined Jun 2006, 260 posts, RR: 0
Reply 25, posted (5 years 10 months 13 hours ago) and read 2775 times:

From what I have read, this all inclusive pricing includes all advertising like print, email and other media, not just the fare shown during a search online. For many routes, the total fare including taxes can change depending on the connection city and country. For example, take Amsterdam to NYC on United and Star. Using all UA coded flights, you could connect in the USA, UK, Denmark, Germany or a combo of any of these. Each combo will give you different taxes. In the past, if UA wanted to advertise this fare they could do the base fare and fuel surcharges as that is the same regardless of the routing. How will they advertise this fare going forward - can they just use the cheapest option with fine print?


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