The Government is going to tax airlines that charge fees for carry-ons...SPIRIT!!!

[disneyworldaddict]

Ha! I just heard on the news that the government is going to charge a tax to airlines who charge an additional fee for carry-ons, are ya' listening Spirit??

Spirit advertises themselves as a discount airline, but nickels and dimes everything; seats, checked bags, now carry-ons. The people most effected by these fees are families! Families with children need to have seats together, and to bring supplies with them on the plane to keep children quiet and entertained, and also in case their checked bags end up lost. They also need to check more. Apparently, the government agrees and is now planning to tax airlines who charge these fees.

Spirit hasn't bothered to enforce their requirement of one carry-on and one personal item. But then they complain that the overhead bins are filled, but meanwhile they charge fees for checked bags. If they just monitor how many bags people bring on the plane and force people to check their extra bags before boarding, this wouldn't be a problem.

 

[PSUGuy]

See, Socialism works!!!

Bill From PA

 

[jsilvers]

Ha! I just heard on the news that the government is going to charge a tax to airlines who charge an additional fee for carry-ons, are ya' listening Spirit??

That is not what has been proposed.

Currently, a 7.5% federal tax applies to air tickets. It is paid by the passenger, not the airline (but it is folded into the price, so it is invisible to the passenger unless one digs deeply into the details). The tax does not apply to add-on fees that aren't strictly "necessary" - i.e., for checked baggage, since one can travel without checked baggage.

Certain members of Congress have proposed that either the Treasury by a regulation, or Congress by a statute, should subject carry-on baggage fees to the 7.5% tax. But this doesn't mean that the airline would pay the tax - it means the passenger would.

The reasoning apparently is that if a carry-on fee was taxable, it would be less desirable for Spirit (or other airlines) to impose such a fee. But it wouldn't prevent them from doing so ... and the plan could backfire if they did so anyway. The $45 carry-on fee would simply become a $48.37 carry-on fee (or a $45 fee of which Spirit kept $41.86)!

 

[lllGurulll]

All taxes get passed on to the consumer.

 

[Tozzie]

Ha! I just heard on the news that the government is going to charge a tax to airlines who charge an additional fee for carry-ons, are ya' listening Spirit??

Spirit advertises themselves as a discount airline, but nickels and dimes everything; seats, checked bags, now carry-ons. The people most effected by these fees are families! Families with children need to have seats together, and to bring supplies with them on the plane to keep children quiet and entertained, and also in case their checked bags end up lost. They also need to check more. Apparently, the government agrees and is now planning to tax airlines who charge these fees.

Spirit hasn't bothered to enforce their requirement of one carry-on and one personal item. But then they complain that the overhead bins are filled, but meanwhile they charge fees for checked bags. If they just monitor how many bags people bring on the plane and force people to check their extra bags before boarding, this wouldn't be a problem.

They want to charge a tax, there are 6 senators who want to pass a law but they can't just start charging a tax on the fee. The way the government works I bet it will be a while before you see any taxes for the fee.

 

[jlewisinsyr]

Ha! I just heard on the news that the government is going to charge a tax to airlines who charge an additional fee for carry-ons, are ya' listening Spirit??

Spirit advertises themselves as a discount airline, but nickels and dimes everything; seats, checked bags, now carry-ons. The people most effected by these fees are families! Families with children need to have seats together, and to bring supplies with them on the plane to keep children quiet and entertained, and also in case their checked bags end up lost. They also need to check more. Apparently, the government agrees and is now planning to tax airlines who charge these fees.

Spirit hasn't bothered to enforce their requirement of one carry-on and one personal item. But then they complain that the overhead bins are filled, but meanwhile they charge fees for checked bags. If they just monitor how many bags people bring on the plane and force people to check their extra bags before boarding, this wouldn't be a problem.

Fortunately your emotional stance on the fees is not the main reason for the tax, and the tax as others have mentioned is a tax that would be paid by the consumer.

I like to think of it this way, some companies choose to bundle the checked luggage costs into their ticket price, others choose to unbundle (my preference). Those who choose to unbundle are charging fees that are currently not subject to the taxes that the base ticket is. Now it isn't much of a stretch to see that there is an unbalanced tax situation, but unfortunately the way the current tax law is, the fees are not taxable. The change in law is meant to fix the unbalanced tax issue. The impact, I think, will be neglible overall in terms of how airlines will structure their fees going forward, most are still going to look to unbundle the cost because consumers (despite what people say on DIS and other forums) have continued to vote with their dollars that they accept these fees and what the lowest ticket price possible. Brand loyalty is very low when it comes to air travel, even lower when the air travel involves a leisure destination.

 

[eliza61]

Wait, what's the problem. A couple of days ago every body was fine with the charge. Spirit was just giving you what you wanted by unbundling fees. Making it easier to load the plane and depart faster. preventing people from causing damage to everybody's noggins from falling luggage.

What's changed. Now because the feds are getting a piece of the action, now it's a problem? What boarding won't be as fast because there;s a tax on the charge? ROTFL
Now we've attached a "ism" to it. bad, bad, bad.


Oh wait, I get it. Only banks & big companies are allowed to hose us.
LOL.

 

[Lewisc]

I don't have a problem if the fee is subject to the excise tax. I wouldn't be surprised if the fee to check luggage winds up being subject to that tax.

The trend is to unbundle. The excise tax was applied to the entire fare. It should be applied to the unbundled elements.

Spirit's current size limits on carryon bags permits bags that only fit in the bin sideways. That means there isn't enough bin space for all passengers. Spirit's CoC says passengers who need to gate check a bag have to pay. That fee isn't waived if the bins are full. I don't know if Spirit is currently waiving that fee.

First passengers to board get to use the bins for free. Last group of passengers have to pay to gate check their bags. That's not fair and slows the boarding.

OP is mistaken. This tax is paid by passenger, not by the airline. The government doesn't want airlines to reduce the excise taxes paid by passengers by lowering the fare but increasing fees. How long before an airline decides to offer a $20 fare with a $60 booking fee?

I don't know if it will take an act of Congress to tax the fees. It's not a reach to say carryon bags and even checked bags were traditionally included in the taxed fare. Consequently fees that offer those service should also be taxed.

 

[lugnut33]

All taxes get passed on to the consumer.

So do additoinal add-on fees.

 

[Lewisc]

So do additoinal add-on fees.

The fees are directly paid by consumers. Excise taxes on fares are directly paid by the consumer.

Costs such as income tax are indirectly paid by the consumer. It's not separately itemized but is one of the expenses that's included when airlines calculate fares.

 

[jlewisinsyr]

Wait, what's the problem. A couple of days ago every body was fine with the charge. Spirit was just giving you what you wanted by unbundling fees. Making it easier to load the plane and depart faster. preventing people from causing damage to everybody's noggins from falling luggage.

What's changed. Now because the feds are getting a piece of the action, now it's a problem? What boarding won't be as fast because there;s a tax on the charge? ROTFL
Now we've attached a "ism" to it. bad, bad, bad.


Oh wait, I get it. Only banks & big companies are allowed to hose us.
LOL.

Still fine with the unbundling, and I don't see how bank or "big companies" hose people either.

 

[Oglet]

I think the thing we all need to remember is we have a choice. We can choose to fly with them or simply choose someone else.

If you don't like the way a place is doing business go elsewhere

 

[bicker]

Precisely. Spirit wouldn't be charging for transportation this way unless enough of us passengers rewarded them for doing so. It is mind-boggling just how much we consumers complain about things that we turn around and motivate with our actions.

 

[Lewisc]

Precisely. Spirit wouldn't be charging for transportation this way unless enough of us passengers rewarded them for doing so. It is mind-boggling just how much we consumers complain about things that we turn around and motivate with our actions.

SW has avoided most fees. They're profitable.

Spirit hasn't found a fee they don't like (OK not literally true). They're also profitable.

There is more then one way to run a profitable business.

Charging for the first checked bag but allowing large bags in the overhead bins was becoming a problem looking for a solution. More bags then available bin space. Spirit found the solution.

 

[bicker]

SW is an exception. No other airline has been able to replicate SW's model.

There is more than one way to run a profitable business, but the same approaches will not always yield the same results when used by different companies.

 

[Lewisc]

Many (most?) airlines aren't profitable, using any model.

Interesting two of the profitable airlines are using almost the exact opposite approach.

Spirit is an ultra-low cost airline. They believe their passengers have no loyalty, other then price. I'm not suggesting SW's model would work for them.

Jetblue's model is closer to SW then Spirit. No fee for the first checked bag. Free Directv.

Spirit's current size limit for bin bags permit bags that only fit lenghtwise. The result is delays as passengers hunt for available bin space. Delays. Safety issues from overloaded bins. Passengers "cheating" Spirit by avoiding paying checked luggage feees.

Spirt found the solution to the problem.

 

[bicker]

... expect the LCC to report a loss of USD0.01 per share on sales of USD863 million when the carrier releases its 1Q2010 financial results on 23-Apr-2010.

[Source: SmarTrend]

 

[Lewisc]

Bicker--It might help if you had identified the name of the LCC.

A company that's losing less money then it's competitors might be doing a good job. SWs new schedule further reduced flights from cities to destinations like Orlando. Flights which only sell out at unprofitable fares. Assuming SW is the carrier you're referring to, an unprofitable 1Q doesn't necessarily mean SW will have an unprofitable year.

At one time I thought SW would change to only one checked bag for free. They'd still have an advantage over most carriers. I don't think that would produce much revenue. I suspect most passengers wouldn't pay to check a second bag. SW doesn't handle much freight. The tradeoff is fuel savings vs marketing.

 

[bicker]

Bicker--It might help if you had identified the name of the LCC.

Sorry... that was in reference to JetBlue. So within a couple of weeks, we should have a good read on how they're doing, but the signs aren't good.

A company that's losing less money then it's competitors might be doing a good job.

True. Sometimes there is nothing you can do to be successful -- you simply need to try to be as little unsuccessful as you can.

SWs new schedule further reduced flights from cities to destinations like Orlando. Flights which only sell out at unprofitable fares.

That's a very powerful approach: When consumers aren't willing to pay enough, then just stop offering service.

 

[disneyworldaddict]

They want to charge a tax, there are 6 senators who want to pass a law but they can't just start charging a tax on the fee. The way the government works I bet it will be a while before you see any taxes for the fee.

Democratic senators seek to tax any U.S. airline that charges for carry-on bags
By The Associated Press
April 14, 2010, 7:05PM

BloombergA Spirit Airlines Airbus A-319 taxis on the runway at the Fort Lauderdale/Hollywood, Florida, International Airport.ATLANTA — Six Democratic senators want to tax any U.S. airline that wants to charge passengers for their carry-on bags.

The legislation announced today comes afterSpirit Airlines, which operates at Atlantic City International Airport, said recently that it plans to begin charging its customers as much as $45 to bring a bag aboard its aircraft and put it in an overhead bin.

Air travelers have been forced to pay a barrage of fees for once-free amenities since 2008. Critics say charging for carry-on bags is stepping over the line.

The legislation would designate carry-on baggage as a necessity for air travelers, and force airlines to pay a tax on that revenue.

The senators argue this would keep more airlines from following Spirit's lead.


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Previous Coverage:
• U.S. Sen. Charles Schumer to urge prohibition of airline fees on carry-on baggage