GAO Releases Long Anticipated Report on Airline Fees

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By Annie Russo
Today, the Government Accountability Office (GAO) released their long anticipated report on airline fees.  The report titled “Consumers Could Benefit from Better Information about Airline-Imposed Fees and Refundability of Government-Imposed Taxes and Fees,” covers a wide variety of topics including the nature of airline imposed fees, the impact on consumers, lost revenues to the Aviation and Airways Trust Fund, and an analysis of which government-imposed fees are refundable.  ACI-NA met with GAO and provided information at the beginning of their investigation on this issue.

The report goes into great detail about the different fees charged by airlines including those for checked baggage, seat selection, food services, and ticket changes.  According to the report, more than half of the most common airline-imposed fees are not subject to the 7.5 percent federal excise tax.  Therefore, the report was not able to answer the question of the total amount of lost revenue to the trust fund.  They did estimate that if only the baggage fees had been subject to this tax in fiscal year 2009 $186 million would have been added to the trust fund.

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Even though the GAO was able to estimate the exact credit to the revenue for the baggage fees for FY 2009, they have not been able to estimate the amount that could possibly go into the trust fund for all of the fees not subject to the 7.5% tax.  The report explains, “As noted earlier, aside from checked baggage, DOT guidance does not require airlines to separately report revenues received from fees for services that have not to date been considered part of the transportation of persons—such as early boarding, seat selection, and standby—and these revenues are also not subject to the 7.5 percent excise tax according to IRS. Thus, we cannot be certain how much additional revenue Treasury might have collected and credited to the Trust Fund if that tax had been applicable to all these fees.”

The House Aviation Subcommittee will further explore the findings in this report as well as hear from airlines and others impacted in the industry at a hearing this afternoon.