The NYT had a piece discussing congressional actions to determine whether fees being tacked on by airlines are actually just concealed fare increases. If this is the case, then they may be allowing airlines to circumvent taxes that are based on air fares. According to the article, such an effort to conceal fee hikes could be depriving airports of as much as $225 million a year in tax revenue. However, the article passes on the airlines' warning that if these fees were also subject to taxes, then this would be passed on to consumers. How worried should consumers be about this prospect? Last year, consumers spent more than $50 billion on air travel, according to the Bureau of Economic Analysis. (This doesn't include business travel.) This means that if taxes on the fees were fully passed on to consumers, then it would raise fares by about 0.4 percent. Assuming business travelers shared the burden, the increase would be considerably less.
--Dean Baker
