15-Jul-2010 10:35 AM

US GAO releases report on airline-imposed fees

US House Transportation and Infrastructure Subcommittee examined fees airlines charge for checked baggage and other services. [more - Subcommittee statements]

The Government Accountability Office (GAO) provided (14-Jul-2010) a report on fees to the subcommittee, stating consumers could benefit from better information about airline-imposed fees and refundability of Government-imposed taxes and fees. 

The GAO found:

  • Fees have supplemented airline revenues, providing at least USD3 billion in revenue in 2009;
  • Fees for optional services are based on costs and other factors and are not fully disclosed to passengers at the time of booking, making it difficult to compare the total cost of flights offered by different carriers.
  • The Department of Transportation (DoT) does not currently require disclosure of airline-imposed optional fees, apart from those for checked bags, but recently issued a notice of proposed rulemaking (NPRM) considering different forms of disclosure of such fees;
  • Airlines' increasing reliance on fee revenues reduces the proportion of total passenger revenue that is taxed to help fund the Federal Aviation Administration. Many airline-imposed fees are not related to the transportation of a person and, thus, only a proportion of the total fee revenue is subject to taxation. The GAO's estimates checked-baggage fee (the largest and only measurable untaxed fee) if taxed in FY2009 would have accounted for approximately 2% of total Trust Fund revenues;
  • The imposition of checked-baggage fees has contributed to declines in checked baggage and the rate of mishandled bags per thousand passengers as well as an increase in the amount of carry-on baggage;
  • GAO found that if Congress wants to tax currently untaxed airline fees, it would need to amend the Internal Revenue Code;
  • GAO recommended the DoT require airlines to consistently disclose optional fees and notify passengers of any refundable government fees. [more - full report] [more - recommendations to Aviation sub-Committee]

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