Klobuchar, colleagues ready to tackle airline tack-on fees

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.

Comments (8)

  1. Submitted by david granneman on 04/15/2010 - 05:29 pm.

    hello all
    is there no end to the government meddling with private business. i think the flying consummers should determine how the airline conducts it service, not the federal government. this kind of nonsense is why the tea parties are growing. government is out of control and needs to be cut back. if the public does not want to pay for bags they will fly a different airline.

  2. Submitted by Rebecca Hoover on 04/15/2010 - 09:00 pm.

    16 million kids in the USA face hunger.
    240,000 in Minnesota are jobless.
    400,000 in Minnesota have no health insurance.
    Suicide rates among soldiers in Iraq and Afghanistan are sky high.
    Rates of homelessness increase.

    Amy Klobuchar answers the call. Amy Klobuchar works really, really hard on reducing the cost of baggage fees. Really, really, really hard.

    She fits in a spread at Elle magazine and travels around a lot, a really big whole bunch, making speeches. She also fits in photo ops as often as possible.

  3. Submitted by Richard Schulze on 04/15/2010 - 09:29 pm.

    On one hand this is an obviously too easy matter to take up for a politician to show they are doing something for their constituents. That’s why I think it rubs many people the wrong way, as well as the fact that govt is trying to regulate “free market”.

    But on the other, the idea that we are buying an airline ticket only as a seat flying through air is appalling! I don’t buy the argument that consumers will vote with their money. Nope, more likely other airlines will jump on the bandwagon.

    We’re one step closer to the utilitarian dream of people paying by their size and weight.

  4. Submitted by Dan Hintz on 04/15/2010 - 09:49 pm.

    Thank god we’ve got Amy Klobuchar to work on the really important stuff.

  5. Submitted by Steve Rudolph on 04/15/2010 - 10:02 pm.

    Great to see MinnPost note that the real issue behind Klobuchar and others looking into these fees is that the airlines are using them as a way to avoid paying their fair share of taxes.

  6. Submitted by Alicia DeMatteo on 04/16/2010 - 01:04 pm.

    David,

    You must not fly a lot, or if you do, it must be in your private jet, because there isn’t much choice anymore (especially coming out of this city).

    If I don’t like something Delta is doing, I rarely have the choice of picking a different airline for a direct flight. Yes, I know I could stop in Chicago or Detroit or Atlanta and fly thousands of miles out of my way and double my travel time if I want more options. This isn’t usually feasible for my travel schedule and isn’t even more cost efficient.

    So yes, if airlines didn’t have a virtual monopoly in their hub cities, I could make a choice to fly on an airline with policies I approved of. But it just doesn’t exist. Not in this city.

  7. Submitted by Paul Scott on 04/16/2010 - 02:39 pm.

    I will pick up where Rebecca left off:

    -Marketing to kids.
    -Subsidizing of corn in the American diet while fresh produce is left to fend for itself.
    -Foot-dragging on cell phones and kids.
    -Academic articles written by drug companies then signed by doctors for pay.
    -Children of low SES being prescribed obesity-inducing antipsychotics at rates that far exceed the prevalence of the illness in the population.
    -Device makers that cannot be sued when a faulty product kills someone.
    -Corporations that pay no taxes.
    -Statins capable of consuming $300 billion annually, despite minimal effectiveness, due to recommendations written by physicians paid by the makers of statins.

    And we get…bag fees! If there exists a more transparently crowd pleasing target I cannot think of it.

    It’s enough to make you miss Coleman, who at least served his party’s president instead of some perceived minivan driving issue subset. Well, I drive a minivan, and I want much more out of my senator.

  8. Submitted by Dion Goldman on 04/17/2010 - 12:13 pm.

    I applaud anyone in Congress to take on the airlines. (And the airlines give money to BOTH political parties too.) They have been poorly managed to the point where they are all loosing money every quarter with the exception of Southwest. AND they don’t charge fees for checked or carry on bags.

    While the major US airlines say they do not “collude” history shows different. When Delta quit paying a very small comission to agents (who work on their behalf to SELL thier product!)the others followed within a few days. This is just one example but there are countless others like this. IF airlines changed their business model, they would make money. Instead they implement “tax free” fees for everything from a seat assignment to a pillow. This will NOT stop until the Feds put a stop to it. I, for one, would like to see US airlines pay their rightful share of federal income taxes. I have been in the travel industry for 14 years. And I an independent voter.

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