U.S. GAO: Better information about airline-imposed fees

We found the following: (1) Fees for optional services are based on costs and other factors and are not fully disclosed to passengers at the time of booking. Airlines have imposed a variety of fees on a range of optional services, such as checked and, most recently, carry-on bags; meals; blankets; early boarding; and seat selection. (2) Airlines' increasing reliance on fee revenues reduces the proportion of total passenger revenue that is taxed to help fund FAA. The IRS has determined that many airline-imposed fees are not related to the transportation of a person--the basis for imposing the 7.5 percent excise tax on domestic air transportation--according to applicable Treasury regulations and IRS guidance--and, thus, only a proportion of the total fee revenue is subject to taxation. (3) The imposition of checked baggage fees has contributed to declines in the amount of checked baggage and the rate of mishandled bags per thousand passengers as well as an increase in the amount of carry-on baggage. Since airlines first imposed checked baggage fees, the number of checked bags per passenger has declined, contributing to a decline in the rate of mishandled bags. However, it is unknown whether baggage fees have had an effect on the rate of mishandled bags per thousand passengers as this information is not available.

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