Frontier Airlines: this is tax fraud.
Frontier adds a ‘convenience fee’ for booking tickets online, which is bizarre on its face. You pay more to buy tickets on their website than you would to buy them in-person at the airport.
- Carrier Interface Charge: Up to $23 per passenger, per flight segment (Non-Refundable)
- The standard fares we display online may include a charge per passenger, per segment, that is assessed on tickets purchased through the website
- The Discount Den fares we display online may include a charge per passenger, per segment, that is assessed on tickets purchased through the website.
The reason they do this is because they’re really just separating out part of the ticket price into an ‘optional’ fee. You have the choice to avoid the fee by driving to the airport, paying for parking, and waiting to do the transaction with a person.
That’s valuable to Frontier because they figure,
- Almost no one will actually do this. It’s far too costly in terms of time and hassle.
- But by treating part of the fare as a fee, they avoid paying the mandatory 7.5% excise tax on U.S. domestic tickets for the fee portion.
Spread across all of their passengers on all of their flights, this is a huge tax savings and boon to their bottom-line. The dirty little secret of the airline industry is that U.S. law encourages airlines to charges higher fees rather than fares, indeed to find new ways to add on fees like checked bag fees and seat assignment fees.
- Members of Congress frequently rail against airline fees
- Yet do nothing about them – refusing to even recognize that it’s their legislation that helps create the incentives behind the fees in the first place.
The trick to all of this is that to treat funds as a fee rather than included with the fare, the service paid for must be optional – which means customers must be able to avoid it (such as by not checking a bag, or getting a seat assignment in advance, or by booking at the airport).
So what’s it like to book at the airport? Hit or miss. The experience varies. Here’s one Frontier customer who experiences it as a Catch-22.
Went to airport to purchase Frontier tickets at counter. No one at counter. Found out subsequently no one comes out to counter until 2 hours before next flight (small Frontier presence at this airport). Told to wait 2 hours (no big deal since I work at this airport).
Agent comes out 3 hours later. Went to purchase tickets.
Exact response: “Sorry, can’t purchase tickets right now, there’s a flight we’re working”.
Look behind me …. No one in line.
You can only buy tickets in-person at limited hours, but you can’t buy tickets during those hours. That means there’s no real option to buy them in person, which means that booking online isn’t a choice customers are making, and therefore the web booking fee is not optional. Frontier excluding these charges from their domestic airfare excise tax calculation, at least from some airports, appears to me to be tax fraud.
It’s time to end the differential tax treatment of fares versus fees. That just creates bad incentives. I have no real opinion on the optimal level of taxation. Airlines are heavily taxed (although tax-loss carry forwards from bankruptcy are a separate issue) but that’s also just part and parcel of so much of aviation being government-provided and subsidized. Regardless of the level of tax chosen, there’s no reason to create market distortions with the distinction between fares and fees.
Even worse, discount den CIC cannot be waived at the airport… there is no way to avoid this “fee”.
Spirit and Frontier do the same. Absolutely tax fraud. At least they let you go to the airport anytime to avoid the fee.
Compare to Breeze which does the same thing… and it only allows you to avoid the fee if you book on a Tuesday for 2 hours only. If you book for a last minute ticket, you cannot avoid the fee. If you want to guarantee the current fare you cannot avoid the fee (unless you somehow live the airport). I lost all respect for Breeze over this restriction.
The time I bought a Spirit ticket at the airport was an experience.
It was much easier to get help from Spirit than Frontier, and the manager and the agent were both very excited.
Why? Because they had never sold a ticket before.
(Agent: “How is it so cheap?! I’m going on vacation!”)
I’m pretty free-market thinking, but either tax or don’t tax: Tax all the price of the ticket, period. Or don’t tax airline tickets at all.
No more free fees. Tax everything and put the final cost upfront in big print. If you want to check a bag then pay for it and the tax that goes with it.
And you just came to think about this now?
Allegiant also, I always go to the airport to purchase tickets.
Frontier doesn’t save anything one way or another. Their tickets might look slightly cheaper online without the tax when comparing prices, but the customer pays the excise tax, the airline is just the collection agent.
I guess the airlines charging for WiFi are also avoiding the excise fee, but if they offer “free” WiFi, the charge must be in the ticket, with an excise fee. We know the satellite provider isn’t giving away the service.
I suppose what really matters is whether Frontier has ‘bent the knee’ to our new king—if so, fraud away; if not, then, byeee. Speaking of, Gary, to call out such alleged corruption, you’ve become quite the investigative reporter, all of the sudden. Just watch out, if we (in the US) do become like Putin’s Russia, we all may need to be careful around open ‘windows.’
@John H – the customer pays the same amount, but Frontier keeps more of it because less of what the customer pays is subject to tax
Good! Any activity that results in sending less money to the government should be celebrated.
@Mike P — My dude, you are so anti-government it’s humorous. Anarchy is not what it’s cracked up to be, sir.
“Members of Congress frequently rail against airline fees
Yet do nothing about them – refusing to even recognize that it’s their legislation that helps create the incentives behind the fees in the first place.”
Members of Congress are not a monolithic bloc. Some may rail against fees but they are probably not the ones who passed the legislation that encourages airlines to add fees instead of putting all of the costs into the ticket price.
As for the $23 per segment for online purchase, I dislike it but I cannot say that it should be $5 per segment or something else. The ticketing system does have some costs to create, update and operate plus usually regulators allow some added profit. Congress has the ability to make every fee taxable. I cannot see how doing that would make the total cost of a ticket go down or even stay the same.
Allegiant is even worse. You can now only buy tickets at select airports. How they can get away with that is beyond me. I’ve never had trouble buying at the counter with Frontier or Spirit.
look in the mirror people,,,, we Re-Elect the ones that allowed this….Term Limits are not necessary , Vote the OUT
I don’t understand why people fly these so called budget airlines. By the time you add in all the fees, pay close to the same amount as the big 3 and then they complain after. They aren’t great but the service and ease of flying with the big 3 makes it worth even few dollars more. Happy travels!
If you are an elite, discerning traveler, choose Delta.
As a bare bones flyer who travels so light I skip the carry on, don’t care where I sit or when I board, and only care about getting from A to B, I am delighted to have the airline subsidize my low fare using fees charged to other people who want and care about such things. A perfect example of the free market and ‘you get what you pay for’. Please continue to not charge me for things I don’t need or want.
The airport I use (MDW) is within easy walking distance from free street parking, and ORD isn’t that much worse as it is the terminus of the train line. It seems bizarre and bad for the environment, but I suppose going to the ticket counter is not that big a burden.
But this does indeed sound like tax fraud, as there is no way to avoid the ‘optional fee’. Class action suit anyone?
How the IRS treats the airline: Do nothing, carry on keeping the millions of dollars, we aren’t arguing.
How the IRS treats me: We discovered a $2 addition error. You owe penalties, interest, and we’re going to send you notices every month till you pay up. If you reply to us, we will ignore your letters and keep sending you computer-generated notices for a few years. When one of our humans reply, we will make sure it is an unhelpful moron reply.
Airlines are EXEMPT from taxes all Americans and other businesses pay on their fuel, and fuel is around 30% of an airline cost. In the real word, airlines are one of the LEAST taxed companies in the US! Let alone they land and depart from airports they didn’t build themselves, but were built with taxpayers’ money.
How quickly they forget about Luigi.
It’s a reciprocal fee. The charge is one smoke detector. I have a closet full of detectors now.
@Bubba — Who’s ‘they’ and which Luigi? Like, the Nintendo character (Mario’s Brother), or the…vigilante?
Both airlines target people that never/could not read and would have no clue they were being ripped off.
I am vehemently opposed to fling Frontier, Allegiant, Spirit or Delta. None tof them have ever heard of Customer Service. The first three because they are so called budget carriers and Delta because they are just plain rude unless you have purchased a ticket in F class. This free pass on fees, however, should be looked at more closely by the Members of Congress. Instead of trying to bleed more money out of the Citizens who actually pay their taxes, the Airlines should be made to pay tax on the bottom line of what the Customer pays for that ticket. Waiting for the day that they hand you a mask when you board and tell you there is a charge for breathing in air. But, then again, as evidenced by the mask mandate during COVID, many people would probably pass out because they did not use it correctly.
Hi Gary, tax law is also a factor in the growth of resort fees. For example in Hawaii, resort fees are exempt from the Transit Accommodation Tax, which is 14.25%. Surprise that the bill includes a large subtotal of resort fees!
Tax the fare or don’t. Fix the loophole.