With the holidays approaching, many Americans will find themselves on airplanes en route to family and friends. And with air travel come the constant frustrations of long lines and baggage fines.
Some of our elected representatives have decided to take a closer look at the now-ubiquitous baggage fines (or fees, depending on how you see it).
Congress has been furrowing its collective brow at the practice. An investigation is under way, and could lead to changes in this increasingly popular tactic that airlines use to bring in more revenue without raising fares.
Representative James Oberstar, of Minnesota, claims that airlines have found a “backdoor” way to raise ticket prices. He may be correct in that assertion, but – if so – his proposed solution is a bit unusual.
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.[…]
“Maybe we have to teach them a lesson, and make them pay their fair share,” Mr. Oberstar said of the airlines.
Unfortunately, the only person being taught a lesson in this example is the tax payer.
An excise tax is paid by a producer, not a consumer – in this case, that means an airline would owe the government a 7.5 percent tax on each $20 baggage fee they charge their loyal customers.
But keep in mind why airlines started charging baggage fees in the first place – they were broke! Baggage fees gave them a mechanism to bring in more money without raising ticket prices on customers.
So, if the airline’s new-found revenues are whittled down by new excise taxes, the lost money will have to be replaced somehow – which probably means you’ll be packing light in 2010!
