Anyone who flies knows about new airline baggage fees. This enables airlines to avoid taxes and requires airport bailouts by US taxpayers.
This is how it works. The Federal Government levies a tax on airline tickets and uses the tax to fund the FAA. However, when the funds are inadequate taxpayers must make up the difference through appropriations from the general fund.
The airlines could simply raise fares to cover all of their costs but a fare increase would result in additional taxes. Instead, they rely on baggage fees which are not subject to any additional tax. And the shortfall must be made up. It comes out of your pockets and mine.
NARP has an interesting article on the airlines’ practice:
Shipping by UPS is a good idea, Chad. After finding out how much the airlines charge my wife recently did the same thing on a trip. I tend to travel by train so there is no problem but flying is certainly faster than the train for long trips.
The handling of baggage costs the airline a huge amount of money. People who travel light, only with carry ons, should not have to pay for the cost of baggage handling. It was a smart move by the airlines to start charging for it, and look for the last couple of holdouts to start charging in the next year or so.
The handling of baggage may cost huge amounts of money, but since day 1, that’s been a part of the deal.
The light-travelling business traveler is a fairly recent phenomenon, born of a desire to avoid the wait at baggage claim.
All it’s done has been to fill the overhead bins with “carry-on” bags the size of small suitcases (which used to get checked). Of course, some people probably take advantage of the “we’re full so we’ll check your carry-on bag at no additional cost” thing most airlines do. If they charged for that, too, there wouldn’t be enough room in the overhead bins.
Back when people traveled with trunks and the like, checked baggage on the railroads amounted to a lot more than it does now. These days you can usually get away with a couple of larger-than-airline carry-ons with no problem.
When I traveled to AZ recently, I mailed some lesser-import items to my mother (then mailed the box back to myself when I returned home). Since I got a late start, it ended up costing me more than if I’d checked a bag, but I didn’t have to wait for it at baggage claim…
The market place has changed, and the airlines are changing with it. Just as passengers have shown that they would rather pay less for a ticket and not get fed while in flight, business passengers have shown that they would rather carry on and save a few bucks on a ticket. Just because something was always included in the past, does not mean that it will, or should, always stay that way.
On a side note, I am not sure how all of this deals with trains, but whatever. It seems like www.airliners.net would be a better location for this.
Overlooking the fact that airline baggage fees have nothing to do with Amtrak or passenger rail, airline ticket taxes provided 53.4 per cent of the FAA’s total spend of $15.1 billion in FY11, as per the FAA’s FY11 Performance Report. Transfers in covered another 31.8 per cent of the spend, and the balance was garnered from departure taxes, fuel taxes, over-flight fees, investment income, etc. Detailed financial information can be found in the FAA’s financial statements. The airline ticket tax is not just for the FAA. It also is a significant source of funds for the TSA.
The baggage fees, as well as other fees imposed by the airlines, are an attempt to cover the costs of handling baggage, changing reservations, etc. They are also an attempt to improve the margins, which are under serious stress because of discounting. They don’t have anything to do with the ticket tax; it is a fixed amount imposed by the FAA, TSA, etc.
The airlines are collecting the tax for the government and flowing it to them. When a business collects a tax for a government, it is usually allowed to keep the monies until the end of the quarter. It then has 10 to 14 days in the following quarter to flow the funds to the appropriate government agency. The average daily ticket taxes collected by the airline is in effect an interest free loan for the quarter.
Fees are a source of revenue. They flow through the airline’s income statement. Assuming there are no additional expenses associated with the imposition and administration of the fees, the fees result in higher net income for the carrier, which means a higher income tax bill for the carrier to the extent that it has taxable income.
Times change, as noted by a previous poster. But, as a former baggage handler on the railroad, I’ve always smiled at the nonchalance with which the airlines treat baggage as compared to the railroads in the old days. Imagine … you had to present an actual baggage claim, vs. picking anything you wanted off the carousel. Or maybe I’ve been smiling at the railroads.
Since you ask, this is what the issue has to do with trains:
"In both fiscal 2009 and 2010, Congress appropriated an additional amount of almost $1 billion.
When the airlines kept ticket prices down by shifting $12.8 billion to baggage fees, they also saved almost $964 million in federal taxes they would have owed if they had hiked ticket prices by that amount.
That $1 billion is almost equal to Amtrak’s annual federal grant, and it’s only a small portion of the federal largesse that air travelers enjoy."
Some airlines are catching up to the trend that some passengers are carrying on more baggage rather than paying the checked bag fee, and are charging carry-on bag fees. It’s about time.
First, this was not written by NARP. They just lifted it from a from a blogger, who does not appear to understand airline accounting and finance. Which should come as no surprise to anyone who has followed NARP, since the staff at NARP, which is thin on expertise, doesn’t understand it either.
One should take NARP’s self proclaimed expertise with a grain of salt.
What the airlines get from the government has nothing to do with trains. I really wish Amtrak supporters would get rid of the “little man” syndrom or what some other form of transportation gets. It really reminds me of when my child comes to me whining that they want a new toy, because her best friend just got one.
The Post article does not account how much of the additional revenue from the baggage fees is taken by income tax.
Yes, the day traveler who only has a briefcase pays for handling suitcases for other passengers in the days before separate baggage fees. The fees are not a problem for me as I am a lifetime gold member on American Airlines and up to two bags fly free. I feel sorry for the skiers who fly to destinations only reached in the winter. Checking bags for skis, boots, and clothes for a family can add up to more than the ticket price. This is part of the reason we gave up skiing. The main reason we gave it up is my two artificial hips which precludes this type of activity.