Airlines Get A Tax Break For Charging You Bag Fees—Frontier Shows Why That Sweet Deal Needs To End

A Frontier Airlines customer reports going to the Raleigh-Durham airport counter to avoid the airline’s $23 online booking fee. Their flight to Philadelphia was $44.98 online. At the airport, with the fee removed, it was even more – $50.98 – because the base fare had gone up. Paying $6 more to avoid a $23 charge is an awfully good illustration of why Congress should stop rewarding airlines for separating the price of a trip into fares and fees. I’d tax both the same way, and lower the rate. This doesn’t have to be a tax increase. But we should stop using the tax code to make airlines worse. Domestic airfares generally attract a 7.5% federal excise tax. Separately charged checked bags don’t incur that tax. A $200 fare that includes a checked bag: $15 in excise tax. A $160 fare plus a $40 checked bag: $12 in percentage excise tax. By splitting out the bag, there’s $3 less in taxes. Across passengers on every flight throughout the year that’s big money – the largest airlines are saving about $100 million a year in tax. And that’s a huge incentive to ‘unbundle’ the ticket price and get more and more money out of the base fare and into fees – like seat fees and priority boarding fees and carry-on fees. Frontier’s Carrier Interface Charge takes this further. They charge an extra fee for buying a ticket on their website That isn’t because web purchases cost more than in-person ticketing To qualify as a ‘fee’ the charge must be optional, so you avoid it by going to the airport (at least that’s the theory) While allowing Frontier to add a large chunk of each ticket into the untaxed ‘fees’ bucket The Raleigh customer says they were comparing ordinary public fares, rather than Discount Den prices. They also shared what they describe as an email from a Frontier support supervisor: Ticket prices are now dynamic and are based on the fare available at the time, demand and channel of purchase. Another customer reports a higher airport base fare leaving just a $2 difference when buying tickets in-person versus online. Frontier uses contractors for airport customer service. Training and booking workflows could explain some inconsistent results. There are other reasons an airport purchase may yield unexpected results. Breeze explicitly excludes airport bookings from promotional codes. Allegiant and Sun Country use versions of the same airport booking workaround. An Allegiant customer reported an $83 online ticket and a $100 agent quote. Removing the $22 booking charge brought the price to $78, saving just $5. That purchase happened by phone after the customer found the airport counter unstaffed. I’ve also covered Frontier customers being told they owe $25 for booking at the airport while trying to avoid the online charge. And Frontier has already lost a case over turning government charges into its own revenue. In April, I wrote about the airline keeping $5.4 million in TSA security fees, cheating passengers and the government. Even if this was administered perfectly at the airport, that wouldn’t change that we should end the disparity. There’s no valid reason for taxing fares but not fees, and letting airlines decide how much they’re charging of each. It’s a terrible incentive that skews the air travel experience. I’d put airfare, booking charges, baggage and seat assignments under the same percentage tax, then reduce the rate to keep projected revenue unchanged. You can disagree about how much aviation should be taxed and still favor treating competing ways of selling the same trip equally. Topics on this page