Time to Tax Those Checked Bag Fees?

Aug. 4, 2010 — -- So you're at JFK and there's your grandma, waiting in line at security, when she gets pulled aside by the TSA for a "special" going-over (while you do a slow burn). Guess what? You're paying for that.

You might be surprised at some of the things you pay for, courtesy of all those taxes and fees levied on that airline ticket of yours. I don't think you'd mind paying some of them, but it's not cheap -- and if you think the taxes and fees make up about 10 percent of your ticket price or so, think again.

Here's an example: you're so jazzed that you've scored one of those elusive $99 each-way cross country fares that you don't even care that it's not a nonstop. However, it's not a $200 fare either, not when you add in the taxes and fees. Let me show the figures for this roundtrip airfare:

Base airfare: $200

Federal Excise Tax: $15

Federal Flight Segment Tax: $14.80

Passenger Facility Charge: $18 (Note this charge can vary and may be lower.)

September 11 Fee: $10

Total airfare: $200. Total taxes and fees: $57.80 for a total ticket price of $257.80. And the taxes and fees represent 28.9 percent of your ticket -- almost 30 percent. Of course, this doesn't include a checked-bag fee (or Spirit's new carry-on fee, which could cost as much as $45 each-way).

So the price of your ticket has zoomed. It's especially high when you consider the taxes you paid on that Kindle you scored from Amazon.com. What taxes? Exactly. Unless you live in Kansas, Kentucky, New York, North Dakota, or Washington, you didn't pay any taxes for that electronic gizmo.

Airfare Bargains: Those Fees'll Get You

Apples and oranges? Maybe, but taxes are taxes and no one's thrilled by them, so let's see exactly what we air travelers have to pay - and what airlines are paying - and who should be paying. Warning: you may not like what I have to say.

For more air travel news and insights visit Rick's blog at: http://farecompare.com

If you're flying within the U.S. these days, there are the four main extra taxes/fees levied on your airline ticket:

Federal Ticket Tax

This is a 7.5 percent excise tax on each ticket. It is collected by the airlines and passed on to the government for deposit in the Airport and Airway Trust Fund, which is the main source of funding for the FAA and the continued development of the air traffic control system.

Federal Segment Tax

Right now this is $3.70 for every flight segment, meaning every take-off and landing, and it too goes to the Airport/Airway Trust Fund. Seeing as how our air traffic control system is still stuck in the 1950s for the most part, I have no objections.

Passenger Facility Charge

This is another "per flight segment" tax, as much as $4.50 per take-off and landing, but it gets capped out at $18. Money from this tax goes to airports to help them fund projects. Some airports desperately need this money; some airports decide to erect wondrous monuments to the glorification of their cities, which frankly gives me heartburn.

September 11 Security Fee

This costs $2.50 per segment and is maxed out at $10 per roundtrip flight. The money finances the Transportation Security Administration (TSA). They do important work, but I know many of you aren't always crazy about their methods, and I guess when you hear things like a child's Play-Doh being confiscated as a potential security risk, you have to wonder.

Airfare Bargains: Those Fees'll Get You

Notice, these are taxes and or fees you passengers pay for, not the airline. Which leads me to another thought.

All the uproar over bag fees and all that shouting in Congress over whether U.S. airlines should pay taxes on the nearly $770 million they collected in bag fees in the first quarter of this year alone -- is it justified? Yes…and no.

Yes, the airlines are making money from baggage fees. Fume all you want over how much better it was in the good old days, but the fact is, bags have become an important new revenue stream for the airlines and there's no turning back.

Besides, checking a bag is an option; you do not have to do it. I haven't done it in years, and as long as I have my trusty carry-on, I have no plans to change (and don't forget, JetBlue still gives you a free bag and Southwest gives you two).

This isn't to say taxing bag fees wouldn't bring in a lot of money to government coffers; it would. The General Accounting Office says if bag fees are taxed at 7.5 percent, it could mean an estimated additional $230 million more in taxes for this year alone, and you know the government is salivating over that.

Funny thing: Congress seems to be putting out the message that the airlines are something akin to "scoundrels" because they are not required to pay taxes on bag fees and that they are somehow "getting away" with it, raking in money on which they pay no taxes. I see it a little differently.

The airlines already pay normal corporate taxes, and when they make money (which isn't very often), they pay plenty. Something else to consider: when the airlines run into trouble, they either go out of business (2008's casualties included Aloha, Skybus and ATA), or they go through bankruptcy, tighten their belts and keep flying (that's what United did in late 2002, and they had plenty of company).

Question: Ever hear of the airlines getting bailed out like the Big Three automakers? Nope. The airlines sink or swim (or, perhaps, soar or fall to earth with a thud).

Besides, if the airlines were required to collect taxes on bag fees, who do you suppose would really be shelling out for these taxes? If you say "the passengers," go to the head of the class. We would be the ones to pay, not the airlines.

And don't be looking for any "first time flier's tax credit" like the one you got from that "first time home buyers" deal. No, just get your credit card out and be prepared to pay.

This work is the opinion of the columnist and does not reflect the opinion of ABC News.

Rick Seaney is one of the country's leading experts on airfare, giving interviews and analysis to news organizations that include ABC News, The New York Times, the Wall Street Journal, Reuters, the Associated Press and Bloomberg. His website, FareCompare.com, offers consumers free, new-generation software, combined with expert insider tips to find the best airline ticket deals.