honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, April 15, 2010

Tax sought on airlines with carry-on fees


By HARRY R. WEBER

ATLANTA Six Democratic senators want to hit U.S. airlines with a tax if they charge passengers for their carry-on bags.

The senators said yesterday this would keep more airlines from following Spirit Airlines' lead. The small Florida airline said last week that starting Aug. 1 it will charge its customers as much as $45 to bring a bag aboard its aircraft and put it in an overhead bin.

Air travelers have been forced to pay a barrage of fees for once-free amenities since 2008, for everything from checked bags to pillows to food. That has not stopped them from flying, but critics say charging for carry-on bags is stepping over the line.

The senators Jeanne Shaheen of New Hampshire, Charles Schumer of New York, Ben Cardin of Maryland, Amy Klobuchar of Minnesota and Robert Menendez and Frank Lautenberg of New Jersey want a law that would designate 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 nonessential services, the senators said. They said the Treasury Department last January ruled that carry-on bags are not 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," the senators said. "This creates a tax incentive for airlines to try to bilk consumers in the form of fees rather than by increasing the fares."

Separately, Cardin and Sen. Mary Landrieu, D-La., said Tuesday they had introduced a bill that would effectively prohibit airlines from charging fees for carry-on luggage and require advanced disclosure of special, often higher fees for specialty checked items. The bill is based on an amendment the two senators proposed last month to the Federal Aviation Administration Reauthorization bill.

Spirit spokeswoman Misty Pinson said in a statement e-mailed to The Associated Press yesterday that the airline is reaching out to all the senators' offices to clarify information that Spirit believes has been misrepresented in the media.

"We are confident that once they see the complete story that they will agree that this is for the benefit of all customers," Pinson said of the carry-on bag fees.

Other airlines will be watching closely to see if the carry-on bag fee announced by Spirit on April 6 will bring in revenue and not drive away passengers. If so, other airlines could follow suit. None has indicated any plans to do so.

Spirit's new charge for a carry-on for most travelers is $45 if paid at the gate, and $30 if paid in advance.

Add-on fees have been an important source of revenue for airlines since oil prices soared to an all-time high of $147 a barrel in July 2008. Those fees became a mainstay for airlines' bottom lines even after fuel prices plunged.

It's unclear whether the anti-carry-on fees legislation will gain traction among Republicans and win support in Congress.