Airlines, Consumer Groups Lobby Against New Taxes

Airlines, pilot, flight attendant and other airline unions and consumer groups are fighting proposed tax increases on airlines and their passengers, saying the new taxes will cost jobs. The first tax would add a $100 departure fee to all flights. The second would double the existing passenger security tax to $5 per one-way trip in 2012, and triple the tax to $7.50 by 2017. (It is currently $2.50 per flight segment per one-way trip, maxing out at $5). The coalition says that nearly 120 members of the House of Representatives have told congressional leaders that the $100 departure tax would cost airlines $1 billion a year. The coalition has launched a website, www.stopairtaxnow.com.

Airlines Take in $1.5 Billion in Baggage Fees and Reservation Change Fees

Airlines collected $1.5 billion in baggage fees and change fees in the second quarter, according to the Department of Transportation. Airlines took in $887 million in baggage fees and $612 million from reservation change fees. Delta Air Lines topped the list, collecting $392,000 in fees, followed by American Airlines, $249,936 and United Airlines, $164,767. So far, the DOT tracks only baggage and change fees, but it has proposed requiring airlines to report a total of 16 different fees.               

Separately, travel technology company Amadeus estimates that airline ancillary revenue will total $32.5 billion worldwide in 2011. It projects that ancillary revenue for major U.S. airlines will increase to $12.5 billion this year from $6.7 billion last year. That is 38% of the global total and represents seven airlines: Alaska, American, Continental, Delta, Hawaiian and U.S. Airways. Amadeus partnered with Ideaworks, a consulting company, on the projections. Ideaworks believes the majority of ancillary revenue for US major airlines comes from selling frequent flier miles. Baggage fees account for 20% and the rest comes from à la carte items such as selling food and beverages Wi Fi, early boarding and other benefits. US-based airlines have readily adapted to an à la carte world, but they also benefit from consumers who are keen to get frequent flier miles.

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