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The feds are targeting the wrong hidden travel fees

Travelers walk past rental car companies at Seattle-Tacoma International Airport
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Travelers walk past rental car companies at Seattle-Tacoma International Airport in SeaTac, Washington October 30, 2013. Voters in the working-class Seattle suburb of SeaTac, which encompasses the region's main airport, will decide on November 5, 2013 whether to enact one of the country's highest minimum wages in a ballot measure supporters hope will serve as a model for similar efforts elsewhere. Amid debate about income inequality in America, the ballot initiative in SeaTac, Washington, would mandate that 6,300 workers at Sea-Tac International Airport and nearby hotels, car rental agencies and parking lots receive a minimum hourly wage of $15, more than double the current federal minimum wage of $7.25. Picture taken October 30, 2013. REUTERS/Jason Redmond (UNITED STATES - Tags: POLITICS BUSINESS TRANSPORT EMPLOYMENT)

The Dept. of Transportation wants more info from airlines.

Newly proposed rules would require airlines and websites such as Expedia, Kayak and Travelocity to more fully disclose add-on fees for things such as checked baggage and more-comfortable seats. But if the feds really want to help travelers control costs, they should also target the array of fees layered on by state and local governments — most of them unadvertised — at nearly every juncture of the typical travel experience.

When I traveled to Los Angeles recently, I booked a rental car at a rate of $105 for three days. The final bill came to $144.21, or 37% more than the advertised price. And it wasn’t the rental agency gouging me. The added costs came from sales tax, a “concession recovery fee,” a “vehicle licensing recoup,” a “customer facility charge” and a mysterious item on my bill listed only as TAF.

Airline costs, by comparison, are usually much clearer. On the same trip, my advertised airfare from New York to L.A. was $383.62, which included $47.23 in taxes and fees. The final amount I ended up paying: $383.62. Had I chosen to check bags, the costs were listed on the receipt sent by the airline the day I booked the ticket.

Airline pricing, in fact, may be the most transparent part of any trip. Recent rules require carriers to include taxes and fees as part of advertised airfares. Most carriers disclose additional fees for checked  baggage or other perks (if you can call them that), because it’s not worth the hassle to argue with angry passengers at the airport or, worse, on the plane. Travelers still need to be wary of hidden fees, but consumer-friendly sites help by listing all airline fees for those savvy enough to do a basic Web search.

Weaker protections

Consumer protections are weaker for hotel and car-rental costs — largely because taxes and fees on those businesses are assessed at the state and local level, not by the feds. On my L.A. trip, for instance, the nightly rate at my hotel was $217, or $652 for three nights. But the total bill came to $751.92, on account of a 14% “occupancy tax” and a 1.5% “business tax.” (Had the room been taxed at the regular sales tax rate, it would have been a mere 9%.)

Taxes and fees add about 20% to the cost of a typical airline ticket, according to Airlines for America, the industry's’ trade association. A 2013 study by the Global Business Travel Association found the average tax rate on lodging in 50 big cities is about 14%. On rental cars, it’s about 13%. On my L.A. trip, the hotel tax rate was close to the average but the rate on my car rental was far higher, perhaps because of additional local surcharges that pushed up the bill.

Washington could require hotels and car-rental agencies to include taxes and fees in advertised prices, just as it does the airlines — except there would be far more political pushback. Nobody likes airline taxes, but taxes on hotels and rental cars usually have a lot of local support, because locals benefit from tax revenue supplied by visitors. In some cases, municipalities that need money even raise taxes on visitors in lieu of tax hikes for residents, making such taxes politically irresistible.

By the same logic, it’s in the interest of local politicians to hide the real costs visitors are likely to face — lest they don’t come, or they offset high costs on one part of the trip by cutting spending on another part. So any move in Washington to really aid travelers — by forcing everybody in the travel food chain to disclose all costs up front, as the airlines do — would be opposed by a unified coalition of corporate and municipal interests. But at least everybody would know in triplicate what it costs to check a bag on a flight.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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