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Travel Industries Find Revenues in Surcharges
Daily Policy Digest

Tax Issues / State & Local Taxes

Wednesday, July 03, 2002
Americans are traveling less since Sept. 11, causing financial pain for travel-related industries. So fees on everything from hotel rooms to airplane seats to rental cars are surging as companies look for new revenue sources and municipalities pay for new facilities.

The poor traveler is further bedeviled by government travel tax increases.

  • Some hotels are still levying "energy surcharges" of up to $3 -- despite the fact that last summer's energy crisis has long since abated.
  • In February, airlines added a federal security fee of as much as $10 per round-trip ticket and Continental Airlines has raised the fee it charges for children flying alone.
  • A number of air carriers continue to impose "fuel surcharges" of up to $25 on some routes -- although fuel prices are considerably lower than when the industry initiated the fees in 2000.
  • Today, taxes and fees on a typical $200 domestic round-trip ticket total roughly a quarter of the overall cost -- a 76 percent jump from five years ago.
Surcharges in the rental car industry have become a source of consumer ire. Partly to blame, travel experts say, are the many new sports stadiums and arenas across the country.

Since 1996, six different stadium proposals affecting rental-car taxes have passed in various cities. One of the largest to pass was a 1999 referendum in San Antonio to fund a basketball arena. It imposed a 15 percent to 16.75 percent increase in hotel taxes and a 10 percent to 15 percent increase on rental cars.

Source: Kortney Stringer, "Surcharges: The Latest Travel Headache," Wall Street Journal, July 3, 2002.

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