Business class: What's a fair air fare?

Despite the fact that air travel has never been as affordable relative to inflation and weekly earnings as it is today, many believe airlines are charging too much. Rarely has a product or service received so much comment in respect of its price as airline fares. 

Two aspects hit raw nerves – the distance/price equation and the extra costs and charges.

There are a host of costs that make up an airline fare. These include: the cost of operating the aircraft; the cost of selling the ticket; the cost of administration; the cost of engineering personnel and parts; and a host of government fees, navigation and airport taxes.

According to US Department of Transport, US airlines’ direct and fixed operating costs are made up of:       

•flying operations, 33.7 per cent;

•maintenance,10.7 per cent;

•aircraft and traffic service, 15.3 per cent;

•passenger service, 7.2 per cent;

•general, administrative, 6.5 per cent;

•promotion and sales, 6.5 per cent;

transport related, 15 per cent; and

•depreciation and amortisation, 5.1 per cent.

So, evidently, a significant portion of the costs are fixed and apply regardless of the distance of the flight.

In some cases, the fixed costs can be 60 per cent of your ticket price.

The real sting comes from taxes and charges and was highlighted a few years back when Skywest Airlines had a $99 fare from Perth to Albany with half the cost of the air fare comprising taxes and charges.

One airline that details the costs for all to see is Air Canada. On a return fare from Sydney to Toronto of $2,521.48, the taxes and charges push the fare to $3,019.62.

The extra costs are made up of:

•Navcan and surcharges, $36.52; 

•Fuel surcharge, $290; 

•Canada airport improvement fee, $18.20; 

•US Agriculture fee, $6.70; 

•Canada security charge, $20.60; 

•US passenger facility charge, $6.10; 

•Australia passenger service charge, $41.92; 

•Australia passenger move charge, $38; 

•US federal customs fee, $13.40; 

•Canada goods and services tax, $1.10; 

•September 11 security fee, $6.80; and 

•US Immigration user fee: $18.80. 

These sorts of charges make Eric Ripper look like a saint.