Program to attract foreign visitors is an economic benefit to the US and should be reauthorized
How government policies cause high airline bag fees
Those bag fees we all hate? Congress has a chance to look into this in coming weeks.
The House Transportation Committee is considering a massive overhaul of Federal Aviation Administration programs. Members should study and solve the problem of how government policies have led to these fees and what can be done to improve the American flying experience.
Here is a roundup of the various fees charged by the big three U.S. airlines, courtesy of TripAdvisor.com.
- On American Airlines, the first bag you check costs $25, the second $35 and the third $150. Snacks are $3.50 to $7, and meals are $6.79 to $10.
- On Delta, it's $25 for the first bag, $35 for the second and $125 for three. Snacks are $3-$9 and meals $7.50 to $10.
- On United, it's $25 for one bag, $35 for two and $125 for three. Snacks are $3-$4, snack boxes $7.50-$9 and meals $4-$10.
In other words, not a lot of difference among the three in any category. If you didn't know better-and is it clear anymore that you don't?-you might think these big three competitors are coordinating to some extent on setting prices for items that used to be free.
And you might be doubly suspicious if you realize all that bag fee income is tax free to the airlines. That's right. When oil reached $145 a barrel in 2008, the airlines began charging baggage fees as a temporary measure to address the high fuel costs. The Internal Revenue Service ruled "transportation of baggage" was not taxable, which, although we weren't told this at the time, meant the bag fees would not be temporary.
And why would the big three abandon them? It's profitable. According to a study by the Bureau of Transportation statistics, domestic airlines collected $3.35 billion in baggage fees last year and $20 billion since they began collecting fees in 2007. Delta got $800 million itself, all tax free.
These fees, which did not exist a decade ago, now account for more than a quarter of airline profits.
Moreover, capacity at airports is in such short supply that carriers such as Southwest Airlines, which don't charge baggage fees, can't get landing slots sufficient to upset the (non)-competitive apple cart.
Congress has a major opportunity to fix the miserable experience flying has become in the U.S. This summer, it will take up legislation to reauthorize the Federal Aviation Administration.
It could, at a minimum, cough up some money for airport expansion and at least stop incentivizing a race to the bottom on service and top on prices for airport/airline add-on fees.
Air travel is, for better or worse, a highly regulated industry. The ground facilities - airports and the like - almost all are controlled by government entities. Either they must give up the control, which is unlikely, or do the job right.
Donald Trump recently called New York's LaGuardia Airport a "third-world dump," and the executive director of the New York Port Authority, which operates LaGuardia, Kennedy and Newark airports, actually agreed.
Indeed, the shortage of airports, runways and gates make U.S. air travel the most congested in the world. America's airports welcomed 33 million more passengers in 2011 than they did in 2001, but the necessary expansions did not occur.
As a result, according to the Federal Aviation Administration, Americans lost $22 billion to late departures and airport congestion in 2011 and could lose twice that or more per year within the next five years. The American Society of Civil Engineers gives air travel a D in its annual report card because demand has so thoroughly overwhelmed supply.
America needs more options in the air. In 2011, our airlines carried 728 million passengers, most of them through 29 big-city airports. The cramped conditions mean more than unpleasant travel. They mean lack of competition, entrenched airlines gaming the system and delays, accidents and need for repairs increasing.
It's time to move ahead. Government spends so much money so ineffectively that this could stand out as a way to make bipartisan headway on effective spending that truly would grow the economy and help an industry that already accounts for 10 million jobs improve.
Everyone agrees the status quo is a mess. This summer, this new Congress, this Congress dedicated to showing that it can govern, will have a chance at a breakthrough. Let's hope it doesn't let that chance slip away.
McNicoll is a conservative columnist and freelance writer based in Alexandria, Va. He is a former senior writer for The Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.