12 DEC 2013: The global airline industry is forecasting a jump in profits to $19.7 billion next year, helped by falling jet fuel prices, rising travel demand and cost-cutting. You will note there is no indication of price savings for travellers factored in there anyplace. Meanwhile, can we hope to avoid a similar hike in Canada, as the federal government solicits public comment on their plan to introduce new online travel applications as part of the its security deal with the US.
Meanwhile, in Geneva, International Air Transport Association says the strong outlook - well above its expected net profit of $12.9 billion in 2013 and more than 2 1/2 times last year's $7.4 billion - would be its biggest absolute profit ever.
But IATA, which represents 240 airlines, or 84 per cent of total air traffic, noted in a report Thursday that margins would be low. Next year's profit would come from projected revenues of $743 billion, whereas 2010's $19.2 billion in profit was made on revenues of just $579 billion.
The higher fee begins on July 1.
Pax will pay
The old fee was $2.50 each way for a nonstop flight, capped at $5 each way if a traveller has a connection. The new fee would be $5.60 each way whether or not there's a connection.
The CEO of Delta Air Lines said (no surprise) travellers will be the ones who pay it.
"Airfares are going up for consumers. So that tax increase will not be absorbed by Delta," Richard Anderson said at a Delta Air Lines Inc. presentation for investors in New York on Wednesday.
Airlines have long complained that sales taxes, security fees, and airport taxes drive up the cost of their tickets unfairly..
The fee is meant to offset some of the cost of the Transportation Security Administration. A report last year by the Government Accountability Office found that the fees currently cover about 29 percent of the cost of airline security. The higher fee is meant to get travellers to pay for more of those costs, although ... some of the new money is slated to be spent on non-security items.
Travellers will pay more to fly even though they're not getting anything new for their money, said Charles Leocha, who runs the Consumer Travel Alliance, which tracks travel issues in Washington.
"The consumers just haven't seen the benefit" of the fees they're paying, he said.
Deal or no deal
Even without the deal, it appears that fares are headed higher.
On Tuesday, Delta raised fares by $4 to $10 on a round-trip domestic ticket. As of Wednesday afternoon, American and United had matched the increase, although Southwest hadn't, said Rick Seaney of FareCompare.com.
Ten other attempted fare increases this year have failed, "due in large part to the price sensitivity of travellers in the current economy," he wrote in an email. "This new fee, while being absorbed directly by passengers, is going to cause carriers heartburn in ticket sales."
North of the border
In Canada, the Federal Government has proposed travel applications for foreign nationals who currently do not need a visa to visit Canada – including those from the UK, France and various other countries - though not the US. Visitors from those countries would have to successfully apply for an electronic travel authorization before arriving by air.
Records released under the Access to Information Act say Canada expects approximately 3.5 million electronic travel authorization applications annually beginning in April, 2015.
Turning visa-exempt into 'we're getting the info anyway'
This would align Canada’s approach to screening visa-exempt foreign visitors with that of the US, enabling them to identify possible security threats before they reach North America.
Visitors would apply through the Citizenship and Immigration website by entering biographic details, passport and background information – the kind of data now requested by officers at Canadian entry ports or in a visa application, says a recently published notice requesting feedback on the initiative.
An electronic system would verify the information against immigration and enforcement databases and conduct a risk assessment of the applicant.
Nice and easy and just a minimal fee
“It is expected that the vast majority of applications would be approved by the electronic system within minutes of applying,” the published notice says. “It is also expected that [affected] travellers may experience faster processing when they arrive in Canada as they have already been pre-screened.”
Those not approved by the electronic system would be referred to an officer for further examination and a decision.
The government plans to charge a “cost recovery” fee – how much isn’t specified, but it would be a “minimal amount,” the notice says. Approved applications would be valid for multiple entries to Canada over a period of up to five years.
As for all those "expected" speedy approvals, "expected:" faster processing and "minimal" recovery fees - watch them slow down and bloat up.
15 years of info on you
The privacy commissioner’s office has expressed concern about the programme’s “lack of transparency,” citing questions as to the information being collected and how it will be used – particularly given that it will be kept for up to 15 years.
“To a large degree, these matters have been shaped behind closed doors, most notably through arrangements with the U.S. rather than through open and public debate,” the office said in a brief last year.
Citizenship and Immigration is accepting feedback on the plan until mid-January.