Domestic Flights

The growing number of airline fees is confusing and misleading for consumers said a new report released by the Government's Accountability Office [GAO], on Wednesday. Congress' financial watchdog, the GAO recommended that airlines be more upfront about the "true" prices of their tickets. Airlines have been tagging on fees for optional services such as meals, blankets, early boarding and seat selection, said the GAO.

These fees, however, were not disclosed at the time of booking, prompting the GAO to recommend that the government step in to improve the disclosure of airline fees, not only for the airlines, but also for travel booking services. According to the report, it should be a requirement for airlines, travel agents, online travel services, and other ticket distribution channels to show all fees and services in a clear and consistent manner.

The report also points out that the airlines have becoming increasingly reliant on fee revenues. Since most of these fees are not related to the transportation a person, the fees reduce the proportion of total passenger revenue that is taxed to help fund FAA. The IRS currently taxes the airlines a 7.5 percent excise tax on domestic air transportation. But while the actual ticket is taxed, the fee for a checked-in bag or a sandwich is not. Therefore, the GAO report says that the IRS is getting much less in taxes from the airlines than they used to thanks to the new fees.

According to the GOA, if the 7.5 percent tax on airline tickets were applied to fees, the government could have raised $186 million last year just from checked bags fees. Not surprisingly, the report's findings have many in Congress and the Department of Transportation considering new rules that would change how airlines charge for baggage, blankets, drinks, luggage, and just about everything else the airlines have tagged fees on. The new announcement could be bad news for the airlines, which have used fees to improve their bottom lines in a tough economy. Last budget year, the top 10 domestic airlines collected $7.8 billion in fees.

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