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My father flys very regularly, therefore his passport fills up with stamps etc. before it is expired. They introduced a German passport with twice as many pages, but it costs twice as much. This is rather ridiculous as the extra paper isn't worth that much. So yes I do believe governments make a nice income from people obtaining passports. If possible plan it out so you have a few weeks or even months to renew your passport so that it doens't cost as much. Also remember that when flying overseas it's advisable to have a passport that is still valid for over 6 months, there are some regulations in some places, they may even not allow you to fly.
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