Congress Investigates Airline Fees In Search Of Tax Revenue

Congress is concerned about the new fees that airlines seem to enjoy piling on their passengers. But not out of any sense of concern for consumers’ wallets. The problem is the lost tax revenue that airports are missing out on when airlines increase their prices through the use of fees instead of by raising fares.

This is no small matter—there are hundreds of millions of dollars at stake.

So far this year, United States airlines have taken in more than $3 billion in fees. If all those fees were subject to the same 7.5 percent excise taxes as fares, then the government would have at least $225 million more to distribute to airports for improvements and expansions.

Won’t someone please think of the airports?

For their part, airlines insist that they’re just trying to find new revenue sources without raising fares, at a time when revenues are down.

The airlines counter that the recession has forced them to think up new revenue streams. This fall, for example, they began adding a surcharge on tickets booked during the most popular travel days during Thanksgiving, Christmas and spring break.

“We have been aggressive and creative,” John Tague, president of United Airlines, told analysts last month. And it has paid off: United collects about $13 in fees per passenger, or 30 percent more than the industry average.

Both higher fees and higher fares are passed on to consumers…as are the additional taxes that would come with higher fares. As a consumer, would you rather pay a higher fare or additional fees?

“Neither” is not an option.

Worried About Losing Tax Revenue, Congress to Investigate Airlines’ Fees [NY Times](Thanks, Andrew!)

(Photo: Chris Rief aka Spodie Odie)