WASHINGTON — Legislation backed by Sen. Amy Klobuchar that aims to reverse one airline’s recently announced fee for carry-on bags may only be the first step in a broader congressional look at baggage charges and other airline tack-on fees.
Lawmakers this week noted that a loophole in the tax code actually encourages the nickel-and-diming of customers through airline fees.
Many airlines have adopted fuel surcharges and fees for the first and second checked bags, but the recent proposed legislation was prompted by Spirit Airlines’ announcement that, beginning Aug. 1, they’ll become the first major domestic carrier to charge for a carry-on bag.
Spirit’s proposed carry-on fee would exempt one personal item (such as a purse or laptop bag) and would come with priority boarding privileges, so customers with those bags will have no trouble finding space for them.
The budget airline serves a few dozen destinations in the United States and Latin America, mostly via its hub in Fort Lauderdale, Fla. It doesn’t fly out of Minneapolis-St. Paul or any other Minnesota airport — the closest airports it services are Chicago O’Hare and Detroit.
“Well, we don’t like any of these fees,” Klobuchar said, noting that 8th District Rep. Jim Oberstar has asked the Government Accountability Office to study all airline fees. Oberstar, who heads the House Transportation Committee, made the request last summer, and a GAO spokeswoman said that its report is on track for publication by the end of July.
That report is expected to cover a comprehensive listing (PDF) of baggage, fuel, ticket change, cancellation and other fees, as well as whether they’re “commensurate with the cost of providing those services to passengers.”
“It’s a practice that’s not allowing the consumer to get a real picture of what the price of their ticket is,” said Oberstar spokesman John Schadl of the fees. Hearings will be scheduled, Schadl said, but it’s too early to say what form any legislation may take.
“This is an issue [Oberstar] is moving ahead on, but is not sure what direction it will take until he sees the results of the GAO report,” Schadl said.
Necessities at 35,000 feet
Key among the issues is a tax loophole that some lawmakers say actually encourages airlines to have baggage fees. As a memo contained in Klobuchar’s announcement explains:
The senators’ legislation would confront this proposed fee by designating carry-on baggage as a necessity for air travelers. Airlines currently pay a 7.5-cent tax to the federal government for every dollar they collect in fares, but no tax is imposed on fees collected for non-essential services. Last January, the Treasury Department issued a ruling that deemed carry-on bags as non-essential for air travel.
As a result, airlines can impose fees on these bags without paying any tax to the federal government on the revenues they collect. This creates a tax incentive for airlines to try to bilk consumers in the form of fees rather than by increasing the fares. The senators said Wednesday that if this tax loophole regarding carry-on bags did not exist, the airlines would likely not seek to charge travelers for this baggage.
Klobuchar’s bill gets into the murky waters of just what is and is not a necessity on board an airline. Not too long ago, that included a hot meal, movie, a blanket, pillow, two checked bags and the option to light up a cigarette if you felt the urge.
Times have changed, and mainly in the direction of doing away with the freebies. Among the only things to be unsuccessfully charged for was when U.S. Air decided to charge for in-flight soft drinks, only to back off some months later after complaints from fliers and onboard staff.
And to be fair to Spirit, its CEO says the carry-on fee will actually lower fares for consumers, who argues that people without carry-on bags actually pay for their unused service on other airlines and would pay less if they didn’t have to.
“We have all seen how carry-on baggage has gotten out of control. Longer security lines and boarding process, injuries due to overcrowded overhead bins, delayed flights and passenger frustration has become commonplace,” Spirit CEO Ben Baldanza said in an open letter to customers posted on Spirit’s website. His airline’s most recent fee — or “latest innovation,” as he dubbed it — is designed to “relieve the carry-on crisis, saving you time and money.”
The statement was accompanied by a video message, shot while Baldanza himself was inside a Spirit overhead bin, that ended with the joke “Had we not implemented this, there’s no telling what people would have tried to put in an overhead bin.”
There’s certainly some truth in that. Speaking just from first-hand experiences on Delta, American, United, US Air and Continental since checked bag fees became commonplace, I’ve seen people trying to jam more and more overstuffed bags that easily should have (and otherwise might have) been checked.
Airline practices and policies usually encourage that behavior, because if you try to carry something on and fail, the airline will almost always check it at the gate for free.