Disclosure of airline fee income sought

7/16/2011

WASHINGTON -- Five dollars for a pillow, $10 to jump ahead in the boarding line -- all those annoying airline fees can add up.

Now the Department of Transportation is proposing that airlines tell it -- and the public -- exactly how much they're making on those fees. And a rule proposed yesterday by the department would require airlines to break down those fees by the type of item or service purchased, from pillows to snacks.

Making airlines report more information about the amount and types of fees will make the total cost of flights more clear, Transportation Secretary Ray LaHood said.

"In an era of rising fees, passengers deserve better information about how airlines are performing," he said in a statement.

Airlines received $3.4 billion from baggage fees and $2.3 billion from reservation change fees in 2010. There is no federal excise tax on those fees, although they are counted when calculating income taxes.

Revenue from seating assignments and on-board sales of food, drinks, pillows, blankets, and entertainment also are not subject to excise taxes. Until now, airlines haven't been required to report revenue from those items separately.

Taxes on airline tickets go toward subsidizing airports and the national's air traffic control system. There has been some grumbling in Congress that ancillary fees have enabled airlines to hold down their fares and the taxes they pay to support air transportation.

Steve Lott, a spokesman for the Air Transport Association, which represents major airlines, said, "We support transparency, and believe customers should always know what products and services they are paying for."

Under the proposal, airlines would be required to report 16 additional categories of fees in addition to baggage and reservation change fees, the department said. Airlines have opposed such disclosure requirements, saying other businesses don't have to make similar disclosures.

The disclosure requirements are due to go into effect next month, but three domestic airline trade groups have asked the department to delay the rule for six months.