Airlines Collect $566 Million in Baggage Fees, U.S. Transportation Committee Investigates
Friday, August 14th, 2009
In the wake of the recession and more airlines struggling to keep up with the economic downturn, many have resorted to hiking up baggage fees, introducing new surcharges and adding a few extra dollars to meal plans in hopes of recovering lost revenue. However, this extra stream of revenue may not be enough to help some airlines push through their difficult economic times, especially if the U.S. House Transportation Committee plans to get a cut.
U.S. House Representative James Oberstar has asked the Government Accountability Office to review the charges that airlines are currently adding to their bottom lines in further detail. According to the Bureau of Transportation Statistics, airlines managed to collect $566 million in baggage fees in the first three months of 2009 alone. This is approximately four times the amount that was collected in baggage fees in the previous year, and Representative James Oberstar believes that these fees may be taking away from funds that could be used towards airport repairs and other federally-mandated expenses. When an airline imposes extra fees on passengers for these types of services, they may no longer impose the 7.5% tax on fares that typically is used for supporting the federal Airport and Airway Trust Fund.
The comprehensive review of airline fees and surcharges would be undertaken by the Government Accountability Office to affirm that the extra revenue is indeed covering the costs of providing services such as baggage handling and meals, and not just to boost the airlines' bottom line. Labor costs vary widely by carrier and destination, so it will take time for the government to collect the data and determine whether the fee prices are aligned with the costs of the service.
While the U.S. government will not have the ability to determine exactly what the fee schedules should be for each airline, they can require airlines to disclose all fees, and impose penalties and fines when an airline fails to comply.