Well there you go then, no outrage justified. So the horrific delays that ensue because people are spending time cramming items into the overhead (and are cited as justification for charging for this “service”) will be eliminated while people figure out how to cram items into the tiny spaces under the seats.
This unconscionable delay will need to be remedied by fees for stowing items under the seat, followed by “excess clothing stuffing” charges for people who try to get away with putting things in their pockets. Plus there are exciting options for seat charges (for those who’d rather not stand during the flight) and pay toilets.
And if it looks remotely like rain or other bad weather is possible, cancel those flights right away to avoid potentially having to deplane passengers because there are nasty unfair regulations making you pay for confining people on board longer than three hours.
They are avoiding the tax. If the intent was to charge a tax on the price of a ticket then segregating the cost of the ticket into non taxable items gets around the tax. Obviously the tax is paid by the consumer, but Spirit gets to advertise a lower rate if they sneak around some of the taxes. The tax is useless to the government if you can just get around it by segregation: otherwise why not take your $250 ticket and call it a $1 ticket with a $249 processing fee? Oh look, its a $1 ticket so we only have to pay taxes on $1!
While I can grudgingly accept airlines starting to charge for checked in luggage given that it is possible to travel without it I think Spirit is wrong here because a fee for carry on crosses the line between a legitimate add-on and dishonest advertising. It is unreasonable to expect anyone to travel for a week with only items that can fit under the seat. When they are charging for both carry on and checked in luggage it is no longer reasonable to avoid both of those fees, and Spirit are now advertising a price lower than they know 99% of their customers are going to pay. Is this higher price going to be the price you see when you search on their website or third party travel sites? I doubt it. If it was I would have no issue with them offering an after advertisement discount if you took practically nothing with you.
What are you arguing? That airlines shouldn’t be encouraged into breaking things down into multiple fees or that Schumer is being dishonest? Because whether its a good idea to have the tax code structured with its current incentive for fees or not, Schumer is hardly hiding the fact that he doesn’t think its a good thing, and hence he’s trying to pass the current legislation to cease incentivizing it. Hence my post.
By your last paragraph, can I reasonably assume you are in favor of legislation that would standardize pricing on services that normally come together, clearly for shopping purposes.
Since when it is our government’s responsibility to make shopping easier?
Yes they are. Granted they pass the tax onto the consumer, as you say. But its still to their advantage to avoid the tax, since they’ll sell far more tickets if they can not charge customers for a tax that their competitors have to pay.
The tax code is not the driving force that is incenting Spirit to unbundle the services with separate fees. They don’t pay the tax, the consumer does. They do it for marketing purposes to advertise a lower base fare. Undbundling of services is a legitimate marketing strategy.
Schumer’s actions are clearly to raise tax revenue. He’s not protecting anyone from anything.
Wrong again. They collect taxes from their customers in accordance with IRS regulations. That’s not avoiding taxes. That’s the type of characterization, that plays into the peoples minds. Spirit’s avoiding taxes, so they must be doing something wrong
Your sentence about selling more tickets because they are avoiding taxes makes no sense.
I seriously doubt Schumer cares about whatever the piddling revenues are that will be gathered by this tax. My back of the envelope calculation is that its something like 30 million a year if it were applied ot every domesitc US flight. Thats probably what the department of the interior spends on paperclips this week.
If Spirit were really acting in the consumer’s best interest by charging $45 (not including any taxes) to carry-on certain bags, then one would expect that their ticket prices will drop by some amount (I’d guess in the $30 range, knowing that not everyone carries bags onto the plane). Has Spirit announced this reduction in fares?
Then clearly this will have zero impact upon the Airlines decision to unbundle services and charge separate fees, which is what Schumer said was his goal.
Sure it does. I’m more likely to buy a ticket from an airline from an airline that doesn’t charge a tax then one that does, since it costs me less money. Hence its in the airlines interest to avoid the tax, even if the consumer is the one that pays it.
Except in this case he’s trying to fix a current loophole that encourages one type of fee structure over another. If his law is passed, federal taxes will have less of an effect on the fee structure, not more.
That hardly follows. 30 million is small spread across a 1.4 trillion/year federal government hardly means its small if charged to the relatively small number of airline flyers.
No, I’m saying that airlines should not be able to change costs around to fees for the purpose of exploiting loopholes in the tax system.
If Spirit Airlines finds clever ways for it and its passengers to avoid paying taxes, then they are screwing every airline passenger because the FAA will be shortchanged on the money it needs to maintain and upgrade airports, ATC, and other important functions.
If people want to or don’t want to fly Spirit Airlines, I don’t care. I just don’t think Spirit Airlines should be finding ways to avoid paying (or have its passengers pay) the taxes that they ought to pay.
ETA: I’m curious as to whether Spirit has reduced fares because it is unbelievable to me that the “true” cost of flying baggage is actually $45 per 20 lb bag. But it does indeed appear that Spirit claims to be reducing fares by an average of $40. My point in any case is that it isn’t fair for the company (or its passengers) not to pay $3.50 in taxes on each segment of flight.
Spirit has the right to undbundle fees and charge them separately. (And the government has the right to tax those services to consumers, however they see fit.)
Sen. Schumer has mislead the public (either intentionally or unintentionally, subject to opinion) about the reasons for his actions in response to Spirit’s new $45 carry-on fee.
If that is the point, then I think you would have been better off posting this in the Pit. Otherwise, what are we debating: Washington politician puts a political spin on his proposed legislation; news at 11?
The excise tax loophole only came into existence in January 2010, to ease tax pressure on consumers. Spirit has had a practice of providing unbundled services for a fee for years. They were the first airline to start charging for checked baggage. This is a marketing practice…not a customer tax avoidance policy.
Even if the loophole is closed, I believe they will continue to charge for other services. This excise tax is not the driving incentive to unbundle services.